Google and Tesla shares plunge as AI spending rattles markets
Shares of Alphabet and Tesla fell sharply after both companies reported significant spending on AI infrastructure, leading to negative free cash flow. Investors are expressing skepticism regarding the immediate financial returns on these massive capital investments.
Why it matters
The market reaction signals a potential shift in investor sentiment toward the 'AI boom,' prioritizing profitability over long-term speculative spending.
Share Save Add as preferred on Google Kali Hays , Technology reporter and Francisco Velasquez Reuters Google and its parent company Alphabet have spent huge amounts on AI Shares of Google and Tesla plunged on Thursday as investors were spooked by the ever-increasing amounts of money being spent on artificial intelligence (AI).
Google's parent company Alphabet saw its share price drop by nearly 7%, while Elon Musk's electric vehicle-maker Tesla saw its stock fall 14.5%.
Both reported negative free cash flow - the money retained after paying for operations and investments - in financial results on Wednesday, alongside promises to spend billions more in the months and years to come.
It was the first time Google had seen the cash metric turn negative since it became a public company in 2004, according to its financial records.
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