22 hrs ago
Alphabet Shares Slide as AI Talent Departures Fuel Investor Concerns
Alphabet is the company that owns Google.
Its shares have dropped over the past month because investors have several concerns.
One concern is that Google’s search business grew more slowly than expected.
Another is that important artificial-intelligence workers have left or changed jobs.
Demis Hassabis became Google DeepMind’s chairman and chief scientist.
Jeff Dean left Alphabet after 27 years and started a company with Sanjay Ghemawat.
Alphabet is still reporting strong growth in Google Cloud and YouTube.
Investors are watching closely because Alphabet plans to spend much more money on AI.
Alphabet shares fell 6% over the past month, while the S&P 500 gained 3%.
Investors are concerned about slower-than-expected search growth and departures or reshuffling among senior AI staff.
Jeff Dean left Alphabet after 27 years and launched a company with senior fellow Sanjay Ghemawat.
Google Cloud revenue rose 82% year-on-year to $24.8 billion, while its backlog reached $514 billion.
Alphabet raised full-year capital-spending guidance to $195 billion-$205 billion amid scrutiny of its AI investment.
- Who
- Alphabet, its Google and Google DeepMind units, investors, and departing AI executives including Jeff Dean.
- What
- Alphabet shares fell 6% in a month as investors assessed search growth, AI spending, and senior AI departures.
- Where
- Alphabet, Google, Google DeepMind, and Gemini operations.
- When
- Over the past month; the business results and spending figures cited are for the second quarter, with further spending increases discussed for 2027.
- Why
- Investors are concerned about slower-than-expected search growth, AI leadership changes, possible model delays, and rising capital spending.
Investor Concerns
Alphabet’s Strengths
AI talent departures
Investor Concerns
Departures and role changes across Google, Google DeepMind, and Gemini could raise questions about Alphabet’s ability to compete in generative AI.
Alphabet’s Strengths
Goldman Sachs Research’s Eric Sheridan said the departures may not significantly affect the business because Alphabet has a deep bench of talent.
AI spending
Investor Concerns
The higher capital-expenditure forecast, including a significant increase discussed for 2027, is increasing scrutiny of Alphabet’s AI spending.
Alphabet’s Strengths
The spending is supporting demand for AI infrastructure, reflected in Google Cloud’s 82% revenue growth and $514 billion backlog.
Growth outlook
Investor Concerns
Search growth slowed more than investors expected in the second quarter, and the next-generation Gemini 3.5 Pro model was reportedly delayed.
Alphabet’s Strengths
Alphabet also reported strong second-quarter results in Google Cloud and YouTube, with YouTube revenue exceeding analysts’ consensus estimate.
Key facts
- Alphabet share performance
- Shares fell 6% over the past month.
- S&P 500 performance
- The S&P 500 gained 3% over the same period.
- Google Cloud revenue
- Revenue rose 82% year-on-year to $24.8 billion in the second quarter.
- Cloud backlog
- Google Cloud’s backlog reached $514 billion.
- YouTube revenue
- Revenue was $11.1 billion, up 13% year-on-year.
- Second-quarter capital expenditure
- Alphabet reported $44.9 billion, compared with Wall Street expectations of $44.7 billion.
- Full-year capital-expenditure guidance
- Alphabet raised its forecast to $195 billion-$205 billion from $180 billion-$190 billion.
Quotes
Eric Sheridan
Goldman Sachs Research analyst covering Alphabet
“There’s been departures from folks at Gemini, Google, DeepMind, Google broadly, and Gemini’s next generation model has been delayed — the 3.5 Pro”
CNBC TV 18
“I think they have a lot of talent. They have a very deep bench.”
CNBC TV 18
Sources
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