Key Takeaways Shares of Google parent Alphabet tumbled Wednesday amid worries about whether the tech giant's spending on AI will pay off. Several analysts lowered their price targets for the stock, citing concerns about the company's weaker-than-expected cloud growth and plans to ramp up spending on AI.

Alphabet, parent company of search giant Google, said it will spend $75 billion in 2025 in the AI arms race, raising investor concerns.

Alphabet shares fell 8% on Wednesday as investors balked at the Google parent's slowing cloud growth and planned $75 billion capital spending for the year, underscoring growing fears over Big Tech's escalating artificial intelligence costs.

Alphabet's big spending plans surprised Wall Street. The news should soothe investors worried about last week's DeepSeek shakeup disrupting the AI narrative.

Meanwhile, the company expects the launch of its new Gemini 2.0 AI model to help drive growth as it moves closer to being a universal assistant. The model has more advanced multimodal and agentic capabilities and will also be used to power its AI Overviews within search. It said its consumer Gemini app is also gaining traction.

Generally speaking, investors do not appreciate slowing growth, as it suggests higher valuations (which are reflected in the share price) cannot be maintained or increased over longer periods. Even so,