The primary catalyst for the current sell-off appears to be the release of the second-quarter financial results, which, despite meeting top-line expectations, offered a cautious outlook for the remainder of the fiscal year. Investors are reacting negatively to management’s commentary regarding the decelerating growth of advertising revenue in the North American market, coupled with a significant upward revision in capital expenditure guidance. This suggests that the cost of maintaining its lead in generative artificial intelligence and high-performance computing infrastructure is outpacing the immediate revenue contributions from these technologies.

Market participants are increasingly skeptical about the timeline for realizing a…