Alphabet earnings updates: Stock sinks during analyst call as company hikes 2026 capex - CNBC
Alphabet reported strong revenue growth driven by its cloud division, but its stock price fell due to increased capital expenditure forecasts. The company is heavily investing in AI infrastructure and the development of its next-generation Gemini 4 model to remain competitive.
Why it matters
Alphabet's massive spending on AI infrastructure signals the high cost of the current AI arms race and its impact on investor sentiment regarding long-term profitability.
Google parent Alphabet reported better-than-expected revenue for the second quarter on Wednesday, driven by growth of 82% in its cloud business. But the stock sank in extended trading as the company lifted its forecast for capital expenditures.
Google now expects capex for the year of $195 billion to $205 billion, up from the $180 billion to $190 billion forecast provided last quarter. The company is pouring money into artificial intelligence infrastructure to keep pace with booming demand.
"We're still in a supply-constrained environment," finance chief Anat Ashkenazi told analysts on the company's earnings call. "I think we've said this now for multiple quarters in a row, and we are seeing very strong demand both from external cloud customers as well as across the business."
As AI competition heats up, Google said its Gemini App now has 950 million monthly active users and can process 22 billion tokens per minute.
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