New York, February 6, 2026, 08:07 EST — Premarket
- Alphabet slipped roughly 1.3% in premarket trading, following its $331.25 close on Thursday
- The 2026 capex forecast sits at $175–$185 billion, significantly outpacing Wall Street expectations
- Google Cloud’s growth surges, yet investors zero in on cash flow and profit margins
Shares of Alphabet Inc (GOOGL) dropped 1.3% to roughly $327 in premarket trading Friday, following Thursday’s close at $331.25. The stock has shown volatility since Alphabet announced a sharp rise in spending connected to its AI expansion. 1
Big Tech faces tough timing. After a tough week for tech and software stocks, investors are quick to punish big spending plans that lack clear short-term payoffs. “The Street has made it clear this quarter that there is little tolerance for capex without accompanying monetization. The cash burn cannot last forever,” said Ryan Lee, senior vice president at Direxion. 2
Alphabet forecasted capital expenditure for 2026 between $175 billion and $185 billion, targeting servers, data centers, and networking equipment — well above the roughly $115 billion expected by analysts, per LSEG data. Gil Luria of D.A. Davidson highlighted that the cloud segment’s 48% growth outpaced Microsoft Azure’s for the first time in years. 3
Alphabet topped estimates on revenue in its fourth-quarter report, with sales rising 18% to $113.8 billion. Earnings per share hit $2.82. Google Cloud posted a 48% revenue jump to $17.7 billion, while Google Services grew 14% to $95.9 billion, the company reported. Alphabet flagged a $2.1 billion employee compensation charge tied to Waymo and noted Waymo’s $16 billion funding round, mostly backed by Alphabet. The company also announced a quarterly dividend of $0.21, payable March 16 to shareholders on record March 9.
CFO Anat Ashkenazi told analysts that for full-year 2026, CapEx is projected between $175 billion and $185 billion, with spending expected to build throughout the year. She reported capital expenditures of $27.9 billion in the recent quarter and $91.4 billion for 2025, breaking down roughly 60% toward servers and 40% on data centers and networking. Ashkenazi cautioned that rising depreciation and data-center operating costs will weigh on expenses. Free cash flow — the cash remaining after CapEx — hit $24.6 billion in Q4 and $73.3 billion in 2025. Alphabet repurchased $5.5 billion of stock and paid $2.5 billion in dividends during the quarter. 4
The capex tussle is pulling Alphabet into a wider market fight over who benefits—and who foots the bill—in the AI race. Amazon’s shares dropped sharply in premarket after it signaled a steep jump in 2026 spending. Meanwhile, MoffettNathanson analysts told Reuters the overall Big Tech outlay is “materially greater than consensus expected.” 5
Alphabet’s stock mirrored the day’s sentiment on Thursday: it kicked off near $312, dipped to a low around $306, then surged to close at $331.25, according to market data. 6
The risk is straightforward. If spending outpaces revenue growth, cash flow could quickly tighten, while margins get hit by depreciation and rising power expenses. A slowdown in digital ad sales would erode any buffer, and the market reacts sharply to any letdowns.
Investors are turning their focus to next week’s postponed U.S. economic data — with the jobs report landing Wednesday and consumer price figures on Friday — searching for signals on interest rates and risk appetite, Reuters reported. The delay came after a short government shutdown pushed the releases back. 7
