New York, Feb 5, 2026, 13:42 EST — Regular session.
Alphabet’s Class A shares slid about 2.4% Thursday afternoon, following a volatile session that saw the stock drop nearly 8% at its lowest point. The shares last changed hands at $324.95.
The sell-off hit big tech stocks broadly, as investors grew wary of the mounting costs behind the AI push. “The AI trade … is perhaps the extinguisher this year,” said Melissa Brown, managing director of investment decision research at SimCorp. Traders were also gearing up for Amazon’s earnings after the bell. Reuters
For Alphabet, the issue isn’t just if AI boosts growth anymore — it’s whether the ramp-up in spending eases. Capital expenditure, or capex, covers investments in long-term assets like data centers, servers, and networking equipment; it requires upfront cash outlay and affects profits down the line via depreciation.
Alphabet announced late Wednesday that its 2026 capital expenditure will range between $175 billion and $185 billion—almost double the $91.45 billion budgeted for 2025, and far exceeding the $115.26 billion average estimate from analysts, per LSEG data. This surge slots Alphabet alongside Meta and Microsoft in the escalating Big Tech spending spree, with combined AI investments expected to top $500 billion this year.
Some bulls chalked up the spending spike as a necessary step for cloud expansion. “Cloud at 48% growth … is no longer a ‘show me’ story,” said Ethan Feller, a stock strategist at Zacks Investment Research. Reuters
During the earnings call, CFO Anat Ashkenazi revealed Alphabet’s 2025 capex hit $91.4 billion, allocating about 60% to servers and the remaining 40% to data centers and networking gear. She cautioned that ramped-up infrastructure spending would weigh on the income statement via increased depreciation and energy expenses.
Alphabet reported a fourth-quarter revenue gain of 18%, hitting $113.828 billion, while net income surged 30% to $34.455 billion, or $2.82 per share. Google Cloud posted a 48% jump, reaching $17.664 billion in revenue. The company also highlighted that its Gemini models now handle over 10 billion tokens per minute via direct API usage, and the Gemini app has surpassed 750 million monthly active users.
The cash machine keeps churning out ads, with investors keen to see if AI shifts user clicks — and what advertisers shell out — as quickly as the company ramps up compute. Cloud remains the closest proof point, though it’s also the segment that typically gobbles up the most capacity.
The risk is clear: higher capex cuts into the margin for error if growth slows. It can take quarters before new data-center capacity actually translates into billable cloud services. If enterprise AI demand stalls, the spending hits upfront while the revenue lags—or might never come.
After the shutdown, the U.S. data schedule picks up with the January employment report set for Wednesday, Feb 11. Then, the January consumer price index (CPI), a crucial inflation measure, is due Friday, Feb 13.
