Alphabet spells out more AI capex, China+1 doesn't add up - Nikkei Asia

Hello from Yifan in Silicon Valley. I hope everyone (in the Northern Hemisphere) is enjoying the falling leaves and sweater season.

Wall Street got a proper scare from Alphabet's earnings before Halloween. On Wednesday, Google's parent company reported solid third-quarter revenue growth, with record sales for the cloud business unit. But its shares plunged more than 10% at one point during extended trading, despite all signs indicating that more people and companies are now using Google's AI services and even its in-house AI chips.

After several years of tech companies pouring billions and billions of dollars into AI, revenue growth alone is no longer enough to impress the market. Google's spending of $51.4 billion in capex for AI infrastructure buildout in three months and ending the quarter with negative free cash flow of $9 billion turned out to be a warning sign for many, rather than a boost to confidence in continued AI investment.