Alexander (25-1, 14 KO) dominated the contest on Saturday night from the outset, landing numerous heavy blows despite having hurt his left hand in the opening round, with stand-in trainer Darren Barker throwing in the towel in round seven to save his man from further punishment.
"I was gutted (about being pulled out)," Purdy said on Sky Sports 1. "I'd have stayed in there till the end, without doubt, but I have to respect my corner's decision. I love Darren. I live to fight another day, but I'm devastated at the moment."
Middleweight contender Barker, who made the call in the absence of trainer Tony Simms, explained: "He's one of my good friends. I'm thinking of his interests. Why would I want him to get dragged out of there? He's a young man with a big future ahead of him.
"He put in a fantastic effort - you've just found out what Lee's all about. But this is a sport - you've got to think of his health, first and foremost. He's in there with a great champion and he did us all so proud."
The bout was switched to a non-title encounter after Purdy failed to make 147-pound weight on Friday.
The 25-year-old, who offered to step in to face Alexander last month when the American's original opponent Kell Brook withdrew due to injury, added: "I knew the weight, I knew the fitness... I knew everything was going to be an uphill struggle but it was something I couldn't turn down - fighting a world-class fighter.
"I just couldn't get in my groove tonight. The better man won on the night."
Olympic bronze medallist Anthony Ogogo earlier posted a six-round unanimous decision victory over Puerto Rican middleweight Edgar Perez, while Haroon Khan - like Ogogo, making his United States debut - needed only 57 seconds to despatch Vincente Medellin.
The bill was topped by an interim WBC light-welterweight title bout between Lamont Peterson and Lucas Matthysse, with the big-punching Argentinian stopping former Amir Khan conqueror Peterson in round three.
Matthysse put Peterson down once in the second round and twice more in the third with left hooks, before the referee then immediately ended the contest.