Rising AI expenditure, margin compression, and earnings misses are creating investor skepticism despite analyst optimism

"Alphabet late in July raised its annual capital expenditure forecast for the second time this year, fanning fears over the pace of returns on its AI investments, especially as concerns mount over delays to its flagship AI model. The company also reported its first ever negative free cash flow in its second-quarter results."

"investor reaction to the earnings report was hardly enthusiastic... The backlash was triggered by mounting expenditure on AI, diminishing margins, and a slight earnings per share (EPS) miss"