Alphabet shares plunged over 10% in extended trading after reporting Q3 revenue growth and record Google Cloud sales, despite strong AI adoption. The market reacted negatively to $51.4bn in AI infrastructure capex over three months and negative free cash flow of $9bn, signaling investor impatience with long-term AI investments. Samsung Electronics also saw shares slump despite becoming the first global tech company to exceed Won100tn ($75bn) in quarterly operating profit, driven by AI-driven memory chip demand. Investors now demand immediate returns rather than waiting five years, as global markets—including China's AI stocks—face similar profitability concerns.
Tech leaders like Elon Musk have long criticized markets for overlooking AI's long-term potential, but nearly four years since the ChatGPT boom began, patience is wearing thin. Adding to market jitters, the upcoming US midterm elections and ~40 local ballot measures on data center development on November 3 cast further uncertainty over AI trades, with implications for the entire Asian tech supply chain.
Meanwhile, a partial reversal of the "China+1" strategy is emerging among PC makers. HP, Asus, and Acer are shifting some production from Thailand and Vietnam back to China, leveraging lesser-known Chinese contract manufacturers to combat rising component costs and AI-driven memory shortages. Dell is also evaluating similar moves, as China remains the preferred option for computer manufacturing due to its experienced workforce and efficiency.
Source: Financial Times Companies · Summarized by HeadlinesBriefing