What Caused the Recent Slump in Alphabet and AMD Stocks?

Recent declines in the stock prices of Alphabet Inc. (GOOGL) and Advanced Micro Devices Inc. (AMD) have raised concerns among investors. Let's explore the factors contributing to these downturns.

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Alphabet's stock experienced a significant drop following the announcement of a substantial increase in capital expenditures.

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The company plans to invest $75 billion in 2025, focusing heavily on AI infrastructure such as servers, data centers, and networking equipment.

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This figure represents a 43% increase from the previous year and significantly surpasses analysts' projections of $57 billion. The unexpected spending increase led to Alphabet's shares dropping by 7.4%.

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Additionally, Alphabet's cloud unit, crucial to its AI goals, reported revenue growth of 30% in the latest quarter, down from 35% in the previous quarter and below analyst expectations.

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This slower growth indicates challenges in gaining market share against competitors like Amazon Web Services and Microsoft's Azure.

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AMD's stock faced a decline due to concerns in its data center segment and AI chip outlook. The company reported data center revenue of $3.86 billion, missing the $4.14 billion estimate, indicating a potential slowdown in growth.

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Additionally, AMD is contending with increased competition from Arm-based server CPUs by Microsoft, Amazon Web Services, and Nvidia, which are gaining market share from AMD and Intel’s x86-based chips.

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