Alphabet plunges 7% as Wall Street revolts against Big Tech's AI spending

Investors who once rewarded every AI capex dollar just handed Alphabet its worst trading day in years, with three more trillion-dollar earnings reports still to come this week.

Alphabet shares fell more than 7 percent after the company raised its 2026 capital spending forecast to roughly $205 billion and reported negative free cash flow for the first time since its 2004 initial public offering, even as Google Cloud revenue grew 82 percent. The selloff dragged the Magnificent Seven index down 4.8 percent, its worst day since April 2025's tariff announcement, as investor sentiment on AI spending flipped from rewarding capex to punishing it. Microsoft, Meta, Apple and Amazon report earnings later this week and are together projected to spend about $724 billion on AI infrastructure in 2026 and nearly $950 billion in 2027; Microsoft is already down 21 percent year to date despite an estimated $190 billion capex plan.