GOOGL Drops Nearly 5% After-Hours — Alphabet Hikes 2026 Capex Spending To $205B, Sees Higher Spending In 2027

• Alphabet revenues increased 24% year-on-year to $119.8 billion, beating expectations of $117 billion. 
• Records earnings of $9.11 per share, surpassing expectations of $2.91 per share. 
• Records unusual gains of $97.98 billion in ‘other income’ on account of strong equity security gains.

Alphabet (GOOG, GOOGL) share price saw extreme after-hours volatility after the company reported Q2 earnings and revenue that surpassed expectations, led by strong cloud revenues and a jump in Gemini users and unrealized securities gains, but the stock dropped after the company hiked its capex spending plans on an earnings call. 

Alphabet’s cloud sales totaled $24.77 billion for the June quarter, an 82% jump over the same period last year and beating expectations of $22.46 billion, according to estimates from Bloomberg. Total revenue came in at 119.8 billion, 24% higher than the previous year and beating expectations of $117 billion. 

Its earnings came in at $9.11 per share, surpassing expectations of $2.91 per share, primarily on account of a surprise $99 billion in equity securities gains, compared to $1.2 billion posted in the same quarter last year. 

Google shares initially fell on the results in after-hours trading before moving back into positive territory. At the time of writing, the stock was back in negative territory, down 4.9%.

Google Hikes 2026 Capex To $205B 

In the quarter ending June, capex jumped 100% to $44.92 billion, bringing the total capex spent so far this year to $78.6 billion. Moving to investments, Alphabet is updating its full-year 2026 CapEx guidance range to $195 to $205 billion, up from the previous estimate of 180 to $190 billion.

“The increase in the range is primarily due to an acceleration in the delivery of capacity to meet growing demand, as we previously shared, we continue to expect our CapEx to increase significantly in 2027,” as per the company’s earnings call. 

Investors are becoming increasingly skittish about the soaring capital expenditures of hyperscalers and if the overall AI demand can absorb these soaring costs. 

Gemini Users Are Surging

Google's AI infrastructure Gemini saw 950 million monthly active users, with over 90% of Fortune 500 companies subscribing to Gemini services. 

While Google’s cloud, advertising and search revenues soared above expectations, cementing its cash flows as the company plans to spend about $190 billion in capital expenditures in 2026. The tech industry has committed billions of dollars to data centers and other AI offerings, and investors are looking for signs that the spending will pay off big. 

Google Cloud's backlog increased by more than $50 billion sequentially, reaching $514 billion in the second quarter. The increase was driven by strong demand for enterprise AI offerings 

Google shares initially fell on the results in after-hours trading before moving back into positive territory and were last down 3% at the time of writing.

GOOGL Stock: Retail View 

Retail sentiment was ‘extremely bullish’ with ‘high’ message volumes. 

One user highlighted that capex spending is going to affect financials at a time when Chinese players are creating similar products at a lower price. 

GOOGL stock has gained 9.3% year-to-date. 

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