Alphabet stock plunges 11% after Google results hit AI trade

On the morning of October 29, A-shares opened lower and kept sliding, with the ChiNext Composite Index falling as much as 4% intraday and more than 4,400 stocks across the market dropping. Trading split into two extremes. On one side, China Construction Bank, ICBC, Agricultural Bank of China, Bank of Communications and Postal Savings Bank of China all hit record intraday highs, with China Construction Bank and ICBC each crossing a market capitalization of 3.1 trillion yuan to rank first and second among A-share listed companies. On the other side, AI hardware sectors such as optical modules, memory and PCB plunged again. T&S Communications neared a 20% limit-down, Eoptolink dropped more than 9%, and Zhongji Innolight, which had surged 10% the previous day, fell nearly 7%. Biwin Storage slid almost 14%, while Advanced Fiber Resources, Robotechnik and Yuanjie Semiconductor each lost more than 10%. Meanwhile, China Shenhua rose over 3% to a record high, and even Ping An Insurance and China Pacific Insurance, whose Q3 net profits dropped sharply amid the market turbulence, closed higher as high-dividend stocks regained their appeal as safe havens.

Market commentary pointed to Alphabet's earnings as the most direct trigger for the selloff, arguing that the results reignited anxiety over returns on AI spending. After the US market closed, Alphabet reported Q3 revenue slightly below expectations and earnings per share of $2.12, far below Wall Street's expected $3.02. Free cash flow turned negative for a second consecutive quarter at -$9.1 billion, and an approximately $8.7 billion loss on equity investments, mainly from write-downs of its SpaceX stake, further dented results. Alphabet's US shares fell as much as 11% in after-hours trading. As a bellwether for global AI capital expenditure, Google's returns on investment were questioned, and the pressure was seen as transmitting directly into China's computing hardware supply chain. As of the morning session, the decline was still underway, and the materials provided contain no information on a subsequent rebound or stabilization.