Alphabet Raises Capital Expenditure Forecast to $195–$205 Billion, Sending Stock Down 7%
After raising its capital expenditure forecast for 2026 from $180 billion to as much as $205 billion, Alphabet's stock dropped by over 7%. The increase reflects the company’s aggressive investment in AI infrastructure and cloud services. CEO Sundar Pichai emphasized that demand is outpacing supply and highlighted strong returns on long-term investments despite short-term costs. Alphabet reported a significant rise in cloud revenue—up 82% year-over-year—and now holds a $514 billion backlog, with half expected to be recognized as revenue over the next two years. However, the company remains free-cash-flow negative and is financing its expansion through debt and new equity issuance. Despite the stock decline, Alphabet trades at one of its lowest P/E ratios in recent history (around 17), raising questions about whether this represents a buying opportunity or continued financial strain.
Tickers: $GOOGL
Topics: AI capital expenditures stock performance