Alphabet's Earnings Beat Overshadowed by Rising Cash Burn and AI Investments
Alphabet (GOOGL) reported strong earnings with over 80% growth in its cloud business, but the stock fell 3% as markets reacted to concerns about rising capital expenditures linked to AI investments. The company now expects AI-related spending to exceed $200 billion this year, prompting a shift toward chip stocks like those in South Korea, which rose more than 4%. However, European chipmaker STMicroelectronics dropped sharply after missing earnings expectations. Meanwhile, Tesla (TSLA) also saw its stock fall by 4% as it reported negative free cash flow for the first time in over two years. Oil prices climbed toward $98 per barrel amid ongoing conflicts in the Gulf and Red Sea, increasing pressure on energy markets and inflation concerns ahead of key central bank decisions this week. The European Central Bank is expected to deliver a hawkish signal due to rising gas prices during winter restocking, with futures pricing in two potential ECB rate hikes by year-end. The U.S. Federal Reserve also faces expectations for further tightening within nine months.
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Topics: AI investment Alphabet capital expenditure chip stocks earnings reports