Markets Rattle as Alphabet's $185bn 'CapEx Shock' Taints AI Sentiment

NEW YORK — A wave of risk aversion swept through global financial markets on Thursday following Alphabet Inc.'s (Google) earnings call, where the tech giant signaled an unprecedented acceleration in capital expenditure, projecting $175 billion to $185 billion in spending for 2026.

The “AI Bubble” Fear

While Alphabet beat earnings expectations with Q4 cloud revenue soaring 48%, the sheer scale of the projected spending—nearly double the 2025 figure—has spooked investors. Wall Street is grappling with a “show me the money” moment, questioning whether the monetization of Artificial Intelligence can keep pace with the infrastructure costs.

This sentiment triggered a violent rotation out of the software sector (“SaaS”), which is increasingly viewed as vulnerable to disruption by AI agents. A basket of software stocks suffered its worst sell-off since 2022, with major players like Salesforce and Adobe dragging down the Nasdaq.

FX Implications: King Dollar Returns

The equity market volatility has reignited demand for the US Dollar as a safe haven.

• DXY (Dollar Index): Rebounded to trade near 97.65, erasing earlier losses.
• Safe Havens: Gold (XAU/USD) saw volatility, spiking toward $5,000 before pulling back, while bond yields remained sticky despite the risk-off tone, with the 10-year Treasury yield holding near 4.27%.

Analysts warn that if the “AI CapEx shock” narrative deepens, it could lead to a broader deleveraging in equity markets, further supporting the USD and JPY while punishing risk-correlated currencies like the AUD and NZD.