Alphabet stock price fell below the 200-day moving average yesterday
After parent company Alphabet released second-quarter earnings that exceeded expectations, its stock price fell more than 7% on Thursday, falling below the 200-day moving average for the first time in more than a year. This is the first time the stock has closed below this long-term technical support level since May 2025, reflecting that investor concerns about huge investments in AI infrastructure have overwhelmed recognition of performance. The financial report shows that Alphabet’s second-quarter revenue was US$119.8 billion, a year-on-year increase of 24%, achieving double-digit growth for the 12th consecutive quarter. Google's cloud business performed particularly well, with revenue soaring 82% to $24.8 billion, setting a record for the fastest growth rate. Net profit reached US$112.1 billion, or US$9.11 per share, much higher than US$2.31 in the same period last year, but it included approximately US$99 billion in unrealized gains on equity investments. However, market concerns completely outweighed the positive results. The company's second-quarter capital expenditure doubled year-on-year to US$44.9 billion, mainly used for the construction of data centers, AI chips and servers. What makes investors even more uneasy is that because the expenditure on asset acquisition exceeded operating cash flow, free cash flow in the quarter was negative 5.9 billion US dollars, which was the first negative value since the company went public in 2004. The company significantly raised its full-year capital expenditure forecast to US$195 billion to US$205 billion, a further increase from the previous guidance of US$180 billion to US$190 billion, and made it clear that expenditures will continue to "increase significantly" in 2027. Alphabet Chief Financial Officer Anat Ashkenazy said that the company is still in a computing power supply-constrained environment, and demand from both internal and external cloud customers is very strong. CEO Sundar Pichai said AI returns are still in their early stages but are redefining what's possible across the company's businesses. Despite the overall strong earnings report, the stock sold off sharply amid doubts about when the massive capital expenditures would pay off. This also reflects that investors’ patience with technology giants’ cash-burning race in the field of AI is waning. Alphabet's market value evaporated by more than $200 billion that day, setting the largest single-day market value loss in the company's history. The index also fell by about 1.2% as a result.