NEW YORK, July 23, 2026, 04:22 EDT — Premarket trading has begun in the U.S., with standard cash trading set to start at 09:30 EDT.
- Alphabet Class A stock was set to open down 3.4% at $330.48 in premarket trading.
- The capital expenditure forecast for 2026 increased to a range of $195 billion to $205 billion.
- Of the reported $9.11 diluted EPS, $6.26 came from equity gains.
Shares of Alphabet Inc. NASDAQ:GOOGL fell 3.4% in early premarket activity as investors reacted to the growing expenses involved in monetising AI demand.
Alphabet increased the midpoint of its 2026 capital spending by $15 billion, setting it at $200 billion. This figure is higher than the $185.7 billion in trailing operating cash.
This is a scale comparison rather than a projection. Quarterly free cash flow dropped to a negative $5.9 billion.
Headline profit was less consistent. Equity-security gains contributed $6.26 per diluted share, representing roughly 69% of the $9.11 overall total.
Reuters reported adjusted earnings of $2.85 per share, falling short of the LSEG forecast of $2.89 by around 1%.
Performance remained robust. Revenue climbed 24% to $119.8 billion. Google Cloud revenue surged 82% to $24.8 billion.
| Metric | Q2 2026 | Q2 2025 | Change |
|---|---|---|---|
| Revenue | $119.8 | $96.4 | Up 24% |
| Google Cloud revenue | $24.8 | $13.6 | Rose 82% |
| Cloud operating margin | 35.6% | 20.7% | Increase of 14.9 points |
| Capital spending | $44.9 | $22.4 | Doubled |
| Operating cash flow | $39.1 | $27.7 | Climbed 41% |
| Free cash flow | -$5.9 | $5.3 | Reversal of $11.2 |
| Capital spending/revenue | 37.5% | 23.3% | Gain of 14.2 points |
Based on Alphabet’s published data. Figures are in billions of dollars and may include rounding.
Operating margin at Google Cloud climbed significantly, but its annual profit increase represented just 27% of the growth in Alphabet’s overall capital expenditures.
The comparison is not exact since infrastructure also supports Search and additional products. However, it does shed light on why cash conversion influenced the share movement.
CFO Anat Ashkenazi told analysts that “The demand still outpaces that investment.” The outlook for spending rose as a result of more rapid capacity delivery. Reuters
Search continued to provide support, with search and other revenue up 17% to $63.3 billion. YouTube advertising revenue increased by 13% to $11.1 billion.
Emarketer analyst Nate Elliott described the results as “impressive.” He noted that the increase in search backs Alphabet’s position that AI enhances search. AP News
Google continues as the third-biggest cloud player, trailing Amazon.com Inc. NASDAQ:AMZN and Microsoft Corp. NASDAQ:MSFT. The latter two are set to report results next week, providing a wider gauge of capital outlays.
Thomas Monteiro, a senior analyst at Investing.com, commented that “the room for error is shrinking every quarter.” He noted that after negative cash flow, the cost of capital is increasing. Reuters
Risks: The release of Gemini 3.5 Pro has been pushed back. Lower demand or more spending could lengthen the cash crunch.
Investors are set to focus on third-quarter operating cash flow and projections for spending in 2027. Ashkenazi has indicated that a further substantial rise is planned for next year.
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