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It has been a roller-coaster year for artificial intelligence (AI) stocks. On one side, the technology's enormous long-term potential has kept investors searching for the next AI winner. On the other, mounting concerns over an AI bubble and whether the industry's unprecedented spending spree can be justified have made the market far less forgiving. That tension has been on full display this earnings season. While several technology giants have delivered results that comfortably topped Wall Street's expectations, investors have looked beyond the headline beats.
Instead, the spotlight has shifted to ballooning AI-related capital expenditures, with tech companies facing sharp sell-offs whenever soaring infrastructure investments threatened near-term profitability or management hinted at even higher spending ahead. Alphabet (GOOG) (GOOGL) became the latest casualty of that trend following its second-quarter earnings report on July 22. Despite reporting another strong quarter, its shares plunged as investors focused on the company's accelerating AI investments rather than its earnings beat.
