Nasdaq Falls as Alphabet’s AI Spending Spooks Investors
The Nasdaq fell 1.64% to 26,117.47 on Thursday as a sharp decline in Alphabet shares revived concerns about the cost and profitability of the AI boom. The S&P 500 lost 0.51%, while the Dow fell 0.31%.
Alphabet plunged about 13%, putting more than $500 billion in market value at risk. Revenue rose 25% to $127.6 billion and Google Cloud sales more than doubled to $30.7 billion, but weaker-than-expected advertising and $51.4 billion in capital spending raised concerns. The company reported about $9.1 billion in negative free cash flow. The Nasdaq selloff also hit software stocks: ServiceNow fell about 23% and Fortinet nearly 22%. The semiconductor index dropped 1.8%.
Investors are questioning whether returns will justify the huge cost of AI infrastructure. Microsoft plans to raise at least $25 billion through a bond sale, while Microsoft, Amazon and Alphabet could spend nearly $600 billion combined on AI infrastructure in 2026. Strong US economic growth and the Federal Reserve’s decision to hold rates at 3.75%–4.00% also reinforced concerns that borrowing costs may remain high. The Nasdaq decline highlights a shift in focus from AI growth to cash flow, financing costs and investment returns.
Bearish
The news is indirectly bearish for cryptocurrencies because it points to a broader risk-off mood in technology and growth assets. Alphabet’s sharp fall, concerns over AI spending and weaker software shares may prompt traders to reduce exposure to higher-volatility assets, including crypto. The prospect of persistently high interest rates can add pressure: tighter financial conditions have historically weighed on speculative assets by reducing liquidity and making safer yields more attractive.
In the short term, crypto traders may watch whether the Nasdaq decline spreads to Bitcoin and major altcoins, alongside Treasury yields, the dollar and spot-market flows. A broad selloff in equities can increase volatility and trigger leveraged liquidations, although the article does not report a direct crypto-market catalyst.
The longer-term effect is less certain. If AI investment concerns persist and borrowing costs remain high, risk appetite could stay subdued. But a correction in technology shares does not necessarily imply a lasting crypto downturn; crypto prices also respond to their own demand, regulation, liquidity and adoption trends. The news therefore signals a negative macro backdrop rather than a crypto-specific change in fundamentals.