Shares of Alphabet Inc. and Tesla Inc. plunged Thursday after both tech giants announced plans to significantly increase artificial intelligence capital expenditure, triggering a broad selloff in mega-cap technology stocks. Alphabet fell more than 5% while Tesla dropped 10%, as investors grew increasingly wary of runaway AI spending.
Alphabet shares slid more than 5% and Tesla plunged 10% on Thursday after both companies unveiled plans to sharply boost AI spending, rattling investors already questioning the return on massive capital outlays.
The selloff reflects growing investor skepticism about the returns from AI investment, with Alphabet's planned capital expenditure increase and Tesla's AI infrastructure spending fueling concerns about capital discipline across the technology sector.
Alphabet's decline came despite reporting strong quarterly earnings growth, with the company signaling it would ramp up AI-related capital expenditure. Tesla's 10% drop followed the electric-vehicle maker's announcement that it would increase investment in AI infrastructure and autonomous driving technology, extending its year-to-date losses.
The selloff in the two megacaps weighed on the broader technology sector. Alphabet shares have declined roughly 9% since April amid concerns over delays in AI initiatives and executive turnover.
The rout signals a potential broader repricing of mega-cap technology stocks as investors shift from AI euphoria to return-on-investment scrutiny. Alphabet and Tesla are among the so-called Magnificent Seven stocks that have driven much of the market's gains over the past two years, and a sustained selloff could trigger a sector-wide correction.
This article is for informational purposes only and does not constitute investment advice.
