Google Shares Slide 7% Over Massive AI Spending Plans

Alphabet reported a strong second quarter, crushing Wall Street revenue expectations with a total of $119.8 billion. The company saw 24 percent year over year growth and marked its 12th consecutive quarter of double digit gains. Despite these positive figures, Google stock dropped nearly 7 percent, erasing $138 billion in market value during Thursday trading.

The sell off started after Chief Financial Officer Anat Ashkenazi announced a hike in capital expenditure for the year. Alphabet is now planning to spend $205 billion on infrastructure, up from an earlier estimate of $180 billion. This extra $25 billion caught analysts off guard and triggered a wave of selling by institutional investors.

Wall Street is showing clear frustration over the company's aggressive spending on data centers and server farms. Analysts are worried that this capital intensive strategy lacks a clear timeline for returns. Investors will be watching closely to see if Alphabet can prove that these expensive bets on artificial intelligence will eventually pay off in terms of bottom line growth.