Amazon and Alphabet Disappoint Investors as Core Businesses Show Weakness

Amazon and Alphabet shares fell sharply after quarterly results disappointed investors, with Alphabet losing nearly 13 percent and about $500 billion in market value on Thursday, while Amazon dropped 4-5 percent in after-hours trading. Alphabet's cloud and AI revenue grew strongly, but its core online search business, which generates half of total revenue, underperformed as customers increasingly use the ad-free AI mode. Amazon's AWS cloud unit grew 39 percent, but its holiday sales forecast came in weaker than expected due to high living costs and rising gasoline prices. Both companies are spending heavily on AI infrastructure, with Alphabet investing over $51 billion in the quarter and posting a negative cash flow of $9.1 billion, while Amazon invested $77 billion. Critics question whether these massive data center investments will prove sustainable, though Microsoft's strong results show investors are not treating all tech giants alike.