New York, Feb 5, 2026, 04:46 EST — Premarket
- Alphabet shares dropped roughly 2% before the open following its forecast of a steep rise in capital spending for 2026
- Alphabet, Google’s parent company, reported solid quarterly gains in both revenue and profit, driven mainly by cloud services and core advertising.
- Investors remain cautious as new U.S. antitrust appeals prolong the legal uncertainty
Alphabet shares fell 1.9% in premarket action Thursday, reacting unevenly to the company’s announcement of a big increase in capital spending aimed at expanding its artificial intelligence infrastructure.
This shift matters as investors grow wary of AI’s price tag and whether the spending will translate into profits soon. Big tech, once a crowded trade, is now facing selloffs on any sign of “more cost, later payoff.”
Across the broader market, investors are pulling back from tech stocks as costs soar for new data centers and chips. “That increase in (Alphabet) capex was absolutely enormous,” said Tony Sycamore, an IG analyst. Reuters
Alphabet on Wednesday projected 2026 capital expenditure—spending on servers, data centers, and similar infrastructure—between $175 billion and $185 billion. CEO Sundar Pichai stated, “Our 2026 CapEx investments are anticipated to be in the range of $175 to $185 billion.” The company posted fourth-quarter revenue of $113.8 billion, an 18% rise, with earnings per share hitting $2.82. Google Cloud revenue surged 48% to $17.7 billion. Q4 Capital
Analysts debated if the cloud demand surge justifies the spending increase. “Cloud at 48% growth with rapidly expanding margins is no longer a ‘show me’ story,” said Zacks Investment Research strategist Ethan Feller. Alphabet’s shares fluctuated in after-hours trading following the earnings before ending lower. Reuters
Cloud is now the pivot for the stock as Alphabet pushes to boost AI tool sales to enterprise clients and catch up with rivals already leading in large-scale cloud computing. The term “hyperscaler” refers to the select few companies operating massive, global cloud platforms.
Advertising continues to power the bulk of Alphabet’s business, with investors keen to see if AI-driven changes in user search behavior will shift ad pricing without hitting the core revenue stream. The company highlighted growth not only in Search and subscriptions but also in its expanding Cloud division.
Legal risk remains a key concern. The U.S. government and most states announced plans to appeal the remedy in the landmark antitrust case targeting Google’s search dominance, according to court filings. This move keeps the door open for stricter regulations, even as Google challenges the core ruling.
The downside is clear: capex outpaces revenue growth, cloud margins hit a plateau, and the market grows impatient waiting for AI-driven returns. Add a new regulatory blow or a slowdown in advertising, and the pressure only intensifies.
Traders will be eyeing Alphabet’s stock to see if it holds steady when regular trading kicks off at 9:30 a.m. ET, and if Wall Street adjusts its outlook following management’s spending plan. The next key date is the quarterly cash dividend, set for March 16.
