The sharp drop is the latest sign of anxiety creeping through Wall Street over how long it will take AI companies to see returns on massive investments.
I know the article is about google, but the bit about caterpillar is insane.
The bleeding even spread beyond the tech sector, as shares of the construction equipment giant Caterpillar — a key supplier of the machines required to build data centers — plunged 9.2% on Thursday.
Caterpillar’s recent earnings report revealed that its revenue beat Wall Street expectations but by less than many traders had hoped.
So, their earnings beat expectations, but they didn’t beat the expectations for how much they’d beat expectations, so the share price went down.
This also points out how the AI bubble is affecting the economy far beyond the tech sector.
Construction equipment used to be used for other things, not just building datacenters. But, since the start of the AI bubble, almost everything else has slowed down because they’re dedicating so much construction equipment and workers towards building datacenters.
In just 1 year, construction work on DCs has gone up by 64.5%. And, that’s from 2025 to 2026. It’s not like it was at a standstill in 2025. Meanwhile, residential construction is down significantly. And, there has been a 25% cut in construction related to manufacturing.
This exact thing has been driving me crazy for like a decade now. Say a company makes $1 billion in profit one year, and the next year isn’t as good but they make $800 million. Still a very profitable company, but because it was less then the year before it’s considered horrible and the company is basically going out of business.
You own land, and you decide to plant it full of one type of crop because the forecast promises you an excellent harvest. You don’t have money, so you get a deposit from people buying the crop, in return of a certain share of the harvest. But most people that did so actually believe the forecast was very conservative and the crop will end up even bigger, so they’ll expect more than you promised.
Then the forecast changes, and the harvest might end up smaller, and much smaller than the people expected. Some want their deposit back, but to do so they have to sell that share to someone else, but they buy it with the current forecast and demand, and pay way less for it.
People buying Caterpillar expected for a massive construction boom. Any kink to that forecast is going to cause some people to reconsider and pull their money to the next potential company able to fly to the moon.
Welcome to stock market, where the stock price is based on expectation instead of how well the company actually doing. There could be profit but if the profit is slightly less than last quarter, the day traders all gonna throw their baby tantrum.
Not to mention as much as this stock fall is “a big deal” it’s just fallen to where it was back in March. And of course that March fall was also a singular moment, because before that were just back to October 2025.
So sure, they’ve lost a year of stock growth, and in a world of “line must go up” falling back a year of stock growth isn’t nothing… But it’s also far from the end of the world.
Which is all to say, Google’s fine in the long run. Day traders don’t look at the long run, so for the moment “panic”, but ultimately it’ll pass.
They are trading at big growth multiples. So if the rate of growth slows then it gets repriced. Their assumption was double digit growth rate, which is one helluva bet.
So, their earnings beat expectations, but they didn’t beat the expectations for how much they’d beat expectations, so the share price went down.
That’s why I always say that big shot, institutional investors are a bunch of cunts. They always think in short term. That’s why I am in favour of half year earnings report so that there is less pressure for companies to think in three months time.
Yep, this is why managing speculative investor expectations is as much a part of managing a modern publicly traded business as actually running the business.
Company I worked at a couple years back not only beat their projected earnings, but made record profits highest quarter ever. Stock prices dropped by a third
They are making less off of AI overviews than traditional ads, but their AI buildout costs are increasing, which is ass backwards. I don’t know if it was in their report but they also supposedly don’t have a strategy for making their customers pay for AI use.
They are making less off of AI overviews than traditional ads, but their AI buildout costs are increasing
Not but, it’s and
Their ad revenue plummeted, because the AI summary costs money each search and also leads to fewer clicks (because people often take the AI answer), meaning Google ads, the core of their business, are not being seen on web sites
Also, they continue to invest crazy amounts in AI data centers (despite being significantly behind in LLM quality)
But that’s really just a piece of the puzzle, the simple answer is they are not only going all in on AI, they’re also destroying the one massive profit center that keeps all their other projects afloat
I know the article is about google, but the bit about caterpillar is insane.
So, their earnings beat expectations, but they didn’t beat the expectations for how much they’d beat expectations, so the share price went down.
What is even going on at this point?
This also points out how the AI bubble is affecting the economy far beyond the tech sector.
Construction equipment used to be used for other things, not just building datacenters. But, since the start of the AI bubble, almost everything else has slowed down because they’re dedicating so much construction equipment and workers towards building datacenters.
https://futurism.com/future-society/data-center-spending-ai-bubble-construction
In just 1 year, construction work on DCs has gone up by 64.5%. And, that’s from 2025 to 2026. It’s not like it was at a standstill in 2025. Meanwhile, residential construction is down significantly. And, there has been a 25% cut in construction related to manufacturing.
This exact thing has been driving me crazy for like a decade now. Say a company makes $1 billion in profit one year, and the next year isn’t as good but they make $800 million. Still a very profitable company, but because it was less then the year before it’s considered horrible and the company is basically going out of business.
The stock market is just rich people’s feelings
You should see NVIDIA stock after every earnings. They beat, by a lot. Stock goes down. Every fucking time. Stock market runs on vibes now.
You own land, and you decide to plant it full of one type of crop because the forecast promises you an excellent harvest. You don’t have money, so you get a deposit from people buying the crop, in return of a certain share of the harvest. But most people that did so actually believe the forecast was very conservative and the crop will end up even bigger, so they’ll expect more than you promised.
Then the forecast changes, and the harvest might end up smaller, and much smaller than the people expected. Some want their deposit back, but to do so they have to sell that share to someone else, but they buy it with the current forecast and demand, and pay way less for it.
People buying Caterpillar expected for a massive construction boom. Any kink to that forecast is going to cause some people to reconsider and pull their money to the next potential company able to fly to the moon.
Welcome to stock market, where the stock price is based on expectation instead of how well the company actually doing. There could be profit but if the profit is slightly less than last quarter, the day traders all gonna throw their baby tantrum.
Welcome to the stock market, which functions off the unsustainable concept of infinite growth
Not to mention as much as this stock fall is “a big deal” it’s just fallen to where it was back in March. And of course that March fall was also a singular moment, because before that were just back to October 2025.
So sure, they’ve lost a year of stock growth, and in a world of “line must go up” falling back a year of stock growth isn’t nothing… But it’s also far from the end of the world.
Which is all to say, Google’s fine in the long run. Day traders don’t look at the long run, so for the moment “panic”, but ultimately it’ll pass.
That tells you how insane the stock market is, if you needed any more proof that is.
Buyers are extremely edgy because they know we are teetering on the edge of a potential collapse.
Yet Tesla can do absolutely fucking nothing and then do a Nazi salute and shares go up 50%
When you say it like that, in this context… it seems, weird, right? Like something is off…
Almost like there are fish out there so much bigger than the world’s richest man in the headlines…
They are trading at big growth multiples. So if the rate of growth slows then it gets repriced. Their assumption was double digit growth rate, which is one helluva bet.
That’s why I always say that big shot, institutional investors are a bunch of cunts. They always think in short term. That’s why I am in favour of half year earnings report so that there is less pressure for companies to think in three months time.
Yep, this is why managing speculative investor expectations is as much a part of managing a modern publicly traded business as actually running the business.
Company I worked at a couple years back not only beat their projected earnings, but made record profits highest quarter ever. Stock prices dropped by a third
They are making less off of AI overviews than traditional ads, but their AI buildout costs are increasing, which is ass backwards. I don’t know if it was in their report but they also supposedly don’t have a strategy for making their customers pay for AI use.
Not but, it’s and
Their ad revenue plummeted, because the AI summary costs money each search and also leads to fewer clicks (because people often take the AI answer), meaning Google ads, the core of their business, are not being seen on web sites
Also, they continue to invest crazy amounts in AI data centers (despite being significantly behind in LLM quality)
But that’s really just a piece of the puzzle, the simple answer is they are not only going all in on AI, they’re also destroying the one massive profit center that keeps all their other projects afloat
You love to see it
datacenter upkeep isnt cheap, if you have tons of those.
Mass manipulation. I wish I were smart enough and had enough to bribe the right people to be in on the looting.