Jake FitzGerald
6 min read
Quick Read
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Alphabet’s 13% drop hit XLC hardest, as the fund holds roughly 23% combined across both share classes, more than any other diversified ETF.
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VUG lists Alphabet as its third-largest holding at 10%, meaning investors owning XLC, QQQ, and VUG together hold Alphabet three times over.
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Alphabet’s capital spending jumped 114% to $51 billion, pushing free cash flow negative and forcing the company to issue $28.7 billion in new debt.
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Alphabet (NASDAQ:GOOGL) shares are down about 13% this morning, trading near $283, after third-quarter results disappointed. CNBC reported the stock was on course for its biggest post-earnings drop on record. If you own the Communication Services Select Sector SPDR Fund (NYSEARCA:XLC) or Invesco QQQ (NASDAQ:QQQ), you took part of that hit even if you never bought a Google share. XLC gets hit hardest, and the reason is a concentration risk most fund holders never check.
What Spooked Wall Street About Alphabet’s Quarter
Alphabet earned $2.12 per share, missing the $2.97 consensus and ending a 12-quarter streak of beats. Revenue of $127.58 billion came in just under the $127.83 billion estimate. Coverage from Reuters, the WSJ, the Financial Times and Fortune focused on slowing search growth, the revenue miss and heavy AI spending deepening cash burn.
Capital spending jumped 114% to $51.36 billion, and free cash flow turned negative at $9.07 billion. To pay for it, Alphabet issued $28.7 billion in notes and sold new shares into the market, which reduces every existing holder’s piece of the company.
Investors looked past Google Cloud, where revenue grew 103%. Part of the miss also came from an $8.70 billion loss on equity investments, which cut EPS by $0.55. Operating income still rose 30%.
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How Much Alphabet Sits Inside Your Fund
