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Alphabet Shares Drop as Investors Weigh High Capital Expenditures for Artificial Intelligence

Alphabet shares fell nearly 8% last week, breaking critical technical support as investors reacted to disappointing spending levels and guidance. The company's second-quarter capital expenditures reached $44.9 billion, slightly exceeding Wall Street forecasts. Furthermore, the administration of Alphabet raised its full-year capital expenditure guidance to a range of $195 billion to $205 billion, signaling a significant increase for 2027. This sell-off occurred as the S&P 500 becomes increasingly concentrated, with 10 stocks now accounting for 38% of the index. Analysts warn that while the AI spending boom is a major driver, the market may be cooling on the high costs of data centers. Investors are now looking to Microsoft, Meta Platforms, and Amazon for further guidance on their AI ambitions. The market's reaction to Alphabet's results suggests that investors are seeking clarity on whether these massive investments will translate into tangible growth across the tech sector.

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