Alphabet Stock Drops Amid Increased AI Spending Forecasts
Shares of Alphabet (GOOGL) fell nearly 7% in recent trading as investors reacted to the company's revised capital expenditure forecasts for its artificial intelligence initiatives. Despite reporting second-quarter earnings and revenue that exceeded analyst expectations, Alphabet warned it could spend more than previously anticipated on AI infrastructure this year and potentially even more in 2027. The increased spending has raised concerns about the sustainability of large-scale investments in AI technology across the tech sector. However, several Wall Street analysts remain optimistic about Alphabet's long-term prospects, with firms like JPMorgan and Mizuho reiterating 'buy' ratings for its stock following the earnings report. The drop erased much of Alphabet’s year-to-date gains. Alphabet now expects capital expenditures to range between $195 billion and $205 billion in 2026, up from a previous forecast of $180 billion to $190 billion.
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