Alphabet Increases Capital Expenditure Guidance for 2026
Alphabet has raised its capital expenditure guidance for 2026 to a range of $195 billion to $205 billion, up from previous estimates. The company spent $44.9 billion on capex in the second quarter alone and reported negative free cash flow of $5.9 billion during that period. The financial impact is not yet fully reflected in Alphabet's income statement because capital expenditures are accounted for through depreciation over time. Servers, which make up about 60% of infrastructure spending, depreciate over six years, leading to an estimated annual expense of around $20 billion from this year’s purchases alone starting in 2027. Depreciation is already a growing cost on Alphabet's income statement and will continue to pressure profits. CFO Anat Ashkenazi noted that the increased infrastructure spending will lead to higher depreciation expenses and data center costs, but it also supports significant revenue growth—up 24% year-over-year in Q2.
Topics: Capital Expenditures Depreciation Accounting Free Cash Flow