Alphabet and Tesla shares plunge as runaway AI spending spooks investors

Shares of Alphabet and Tesla took a beating Thursday after the tech giants said they would ramp up their already breakneck pace of artificial intelligence spending – rattling investors who are increasingly wary of whether the massive bets will pay off.  

Tesla shares fell 10% and Alphabet sank over 5%. The dismal trading day comes after Alphabet shares already closed 1.5% lower on Wednesday and Tesla closed down 1.3%.

Both companies warned of massive run-ups in spending: Alphabet raised its capital expenditure forecast for this year to $195 billion to $205 billion and said those figures could balloon even higher next year. The Google parent company previously projected capex between $180 billion and $190 billion.

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