Alphabet shares (GOOG, GOOGL) dropped more than 3.5% on Wednesday. Investors are reacting to the high costs of expanding AI capabilities for Gemini models. Competitive pressure from Meta is also weighing on the stock price. Analysts are currently balancing heavy capital expenditures for data centers against future revenue potential.
The sell-off occurred despite Google launching Gemini 3.8 Flash TTS and Flash-Lite TTS models. These new tools aim to improve text-to-speech generation. Market concerns regarding profitability and Meta’s AI progress are overshadowing these product updates. Alphabet’s decline contrasted with Microsoft shares, which remained flat during the session. This divergence suggests a potential rotation of capital within the AI sector.