New York, Feb 5, 2026, 16:04 EST — After-hours
Alphabet’s Class C shares (GOOG.O) fell 0.8% to $330.53 on Thursday after tumbling as much as 8% early in the session before bouncing back. The drop came after the Google parent revealed plans to nearly double its capital spending — known as “capex” — on projects like data centers and servers to fuel its AI ambitions. 1
The sudden shift is significant as investors grow increasingly nervous about how much Big Tech is pouring into AI, even when earnings appear strong. Alphabet’s expanded spending blueprint arrived amid a market questioning, with rising intensity, the ultimate payoff and its timeline. 2
One strategist called it a new kind of trial for mega-cap tech — huge spending, with returns already baked in. “This is the first time” the biggest players have pushed through a capex cycle at this magnitude, said Tom Hainlin of U.S. Bank Wealth Management. Now, the market’s pricing in uncertainty over whether those investments will actually pay off. 3
Alphabet’s latest figures reveal the reasons behind its aggressive push. Revenue climbed 18% to $113.8 billion in the December quarter. Google Cloud revenue surged 48%, hitting $17.7 billion. Net income reached $34.5 billion, with earnings per share up to $2.82. CEO Sundar Pichai highlighted AI investments as key to “drive revenue and growth across the board.” The company forecasts 2026 capex between $175 billion and $185 billion. It also announced a quarterly cash dividend of $0.21, payable March 16. 4
On the earnings call, executives stressed that their spending reflects demand rather than an open-ended gamble. Pichai noted the company has been “supply-constrained.” Analyst Gil Luria at D.A. Davidson highlighted cloud growth surpassing Microsoft Azure’s for the first time in years. Ethan Feller, strategist at Zacks Investment Research, added: “Cloud at 48% growth… they showed us.” 5
Alphabet is pushing hard to boost its AI usage numbers, aiming to prove progress beyond just infrastructure. Bernstein’s Mark Shmulik warned that mega-cap AI investments could top “north of a trillion dollars” by 2026, and said the market for AI-driven products must grow rapidly to justify that spending. Pichai reported the Gemini app hit 750 million monthly active users by quarter’s end; still, it lags behind ChatGPT, which OpenAI CEO Sam Altman said had over 800 million weekly active users as of October. 6
Still, the spending spike ramps up near-term risks: rising depreciation and operating costs could weigh on earnings before revenue growth catches up. CFO Anat Ashkenazi flagged that the surge in technical infrastructure investment will hit the income statement through “higher depreciation expense” and energy costs tied to data center operations. She also cautioned that fluctuations in component supply and payment schedules may cause “variability” in reported capex. 7
Traders brace for one key event on Friday: Amazon reports after Thursday’s close. Eyes will be glued to its cloud division, searching for clues on demand trends and spending habits across the industry. 8
