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Alphabet shares fall as cloud growth concerns and AI spending rattle investors

Alphabet shares are on course to lose roughly $180 billion in market value, erasing all its stock price gains for the year. The dour report also pulled down shares of cloud rival Amazon.com, which is set to report earnings on Thursday. Analysts noted that the results signify a significant shift in Google’s business, moving from a capital-light, high-margin search advertising business to a capital-intensive, more competitive AI company. The company’s projected 2025 outlay is 29% above estimates, and it will prioritize expensive AI investments over the risk of falling behind competitors. This has unsettled investors looking for a clearer route to AI-driven profits. The massive capital expenditure (capex) ramp comes at a time when China’s DeepSeek low-cost AI model has raised questions about Big Tech’s multibillion-dollar AI development spending. Despite better-than-expected revenues at Google’s mainstay ads business, the spending concerns overshadowed the positive results. At least ten brokerages cut their price target on Alphabet’s stock, while two analysts lifted the targets, bringing the median target to $217. Alphabet’s shares are the cheapest of the major three U.S. cloud providers, with a 12-month forward price-to-earnings ratio of 22.7. — news from Reuters

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