New York, February 5, 2026, 14:55 ET — Regular session
Alphabet shares slipped roughly 1% to $329.58 in Thursday afternoon trading, clawing back some losses from an earlier drop. The Google parent had just revealed a steep rise in spending on artificial intelligence infrastructure. Earlier, the stock had dipped as low as $306.74.
The shift carried weight well past a single firm. Alphabet’s spending now serves as a fast gauge of investor appetite for Big Tech’s AI investments — and just how much patience remains.
Capital spending, or “capex,” refers to the cash companies invest in long-term assets like data centers, servers, and networking equipment. While it typically fuels growth, it can squeeze short-term profits due to higher depreciation and operating expenses.
Alphabet projects 2026 capital expenditures between $175 billion and $185 billion, citing strong demand for its AI products and cloud services. “Our AI investments and infrastructure are fueling revenue and growth across the board,” CEO Sundar Pichai said in the earnings release. 1
The filing revealed fourth-quarter revenue hit $113.83 billion, marking an 18% increase from last year. Diluted earnings per share came in at $2.82. Google Cloud’s revenue surged 48%, reaching $17.66 billion, while Google Search & other revenue grew to $63.07 billion. 1
Alphabet highlighted the scale of its AI operations, revealing that Gemini now handles over 10 billion tokens per minute through direct API calls. The Gemini app itself has surged to more than 750 million monthly active users. 1
Some analysts focused on Alphabet’s cloud segment, pointing to its growth rate as a green light for increased spending. Ethan Feller of Zacks Investment Research noted the company has “established itself as a legitimate hyperscaler,” a nod to the top cloud providers running huge data-center networks. 2
On the Street, the initial reaction wasn’t all gloom. Wedbush’s Scott Devitt bumped his price target on Alphabet from $360 to $370, maintaining an Outperform rating. He noted that “concerns around the impact of genAI on the business are fading.” 3
Thursday’s uneven trading highlighted just how sensitive sentiment has become around AI spending. Investors are increasingly viewing the capex cycle as a sector-wide play on megacap tech, not something that plays out company by company.
The downside scenario is clear: if demand slows or customers push back on prices, spending might just translate into higher costs without a matching boost in revenue. Investors would then zero in on margins and cash flow instead of “AI momentum.” Alphabet has also flagged limits on its compute capacity, a reminder that supply bottlenecks can restrict short-term gains even amid strong demand. 2
Next up is a major earnings report. Investors will scrutinize Amazon’s results after the close for hints on the scale of capex growth in the sector — and if Wall Street will continue to punish the spending. “We’re seeing this volatility about whether this investment will translate, ultimately, into results,” said Tom Hainlin, an investment strategist at U.S. Bank Wealth Management. 4
