Shares of major technology companies have been under pressure since mid-May, with Alphabet emerging as one of the biggest laggards in the group. The selloff has pushed Alphabet’s stock about 15% below its mid-May peak, setting off renewed investor debate about how long the market’s enthusiasm for artificial intelligence infrastructure can last—and which megacaps can still deliver fundamental growth.
Against that backdrop, investors are looking beyond near-term volatility at three large-cap names—Broadcom, Meta Platforms and Alphabet—each tied to the AI buildout either through infrastructure demand, AI-enabled engagement or cloud and machine-learning products.
Key takeaways
- Price move: Alphabet shares have slipped to roughly 15% below their mid-May peak, while Meta has fallen about 30% from last August’s high.
- Catalyst: Concerns tied to AI spending plans and, in Broadcom’s case, weaker quarterly guidance have weighed on sentiment.
- What investors watch: AI data center capex spending durability and how quickly demand translates into revenue and margins.
- Implication for positioning: The market may be repricing near-term expectations, creating potential entry points for investors focused on long-term earnings power.
What drove the selloff in AI-linked megacaps
The declines come as investors reassess how AI infrastructure spending will convert into company-level growth. Alphabet, specifically, is drawing attention for the possibility that AI-related demand could slow broadly. That concern has intersected with questions about whether cloud and AI product momentum is strong enough to offset any weakening in the broader AI cycle.
Broadcom and Meta have faced their own idiosyncratic pressures. Broadcom’s shares have been boosted over time by AI networking demand, but the stock has also experienced a pullback—around 20% from its early-June peak—after the company issued Q3 guidance that disappointed some investors. Meta, meanwhile, has been declining even before the latest market-wide stumble, with the latest acceleration tied to investor worry about the scale and timing of its 2026 capital expenditure plan, described in the article as up to $145 billion.
Broadcom: AI infrastructure demand meets valuation risk
Broadcom has benefited from the AI buildout, with the article citing that shares are up more than 556% since late 2022. It attributes that performance to strong revenue growth and comparable bottom-line expansion over the period, positioning Broadcom as a key supplier of technology used in AI data centers.
The central debate, however, is the risk that AI data center spending could soften. If demand for AI solutions were to weaken, it could reduce the need for data center connectivity equipment—an outcome that would eventually pressure Broadcom’s growth outlook. The article also notes that Broadcom’s steep valuation could become a liability under that scenario.
Still, the article argues that a dramatic drop in connectivity equipment demand appears less likely given how committed data center owners and operators are to large infrastructure investment plans this year. The implication for investors is that the pullback following Q3 guidance may already be pricing in near-term headwinds, even as the broader capex cycle continues.
Meta Platforms: spending scrutiny, but AI capacity and ad performance remain key
Meta’s stock weakness has been driven by investor concern over its capital expenditures, with the article stating the market has largely focused on the size of its 2026 investment budget—up to $145 billion. The selloff reportedly began before the recent broader market downturn and then accelerated.
At the same time, the article points to an argument that Meta is positioned to make “constructive” use of its AI computing capacity. It cites Meta’s scale—3.56 billion daily users across its products—as a foundation for converting AI investment into engagement and monetization.
Operationally, the article highlights early signals that ad demand and pricing can still support the story: despite a decline in active headcount in Q1, total ad impressions rose 19% year over year, and the average price per impression improved 12%. For investors, the key takeaway is that even when markets focus on capex outlays, fundamentals tied to ad performance can help determine whether the spending cycle is viewed as investment or a drag.
Alphabet: cloud share gains and Google’s cash flow underpin the bull case
The article frames Alphabet as a potential contrarian buy “on the dip,” noting that investors have grown worried about the possibility of a broad AI slowdown. But it argues that deeper fundamentals weaken that bearish premise.
On the product and services front, the article says Alphabet is gaining market share in public cloud services, supported by the company’s reach with institutional customers. It also points to progress with its AI chatbot Gemini as part of the competitive landscape.
Just as important, the article emphasizes that Google remains the dominant revenue engine, accounting for more than 80% of Q1 revenue. That matters because it suggests Alphabet’s core profitability may provide stability even if parts of the AI spending cycle cool.
The article also notes that analysts have not shifted uniformly to the bearish view: it states that the vast majority of the analyst community rates the stock as a strong buy, and it references a consensus price target of $433.76—more than 25% above the stock’s current level in the article.
What to watch next
Investors will likely track upcoming company updates for clearer evidence on how AI capex is translating into demand—especially around guidance and operating leverage. For Alphabet, attention will center on whether cloud share gains and Gemini’s momentum can offset any AI-cycle concerns. For Broadcom and Meta, investors will watch whether guidance and performance data reinforce the durability of the AI infrastructure buildout and whether large capex commitments produce measurable returns. With the market still reactive to AI spending signals, the next set of earnings reports and forward guidance will be key in determining whether the recent pullbacks develop into sustained reversals or remain temporary.
