Another Downturn on the Way? US Professor Says Google to Cut AI CapEx

BlockBeats News, July 22nd - Finance professor and CTA (Commodity Trading Advisor) Damir Tokic recently sparked a discussion in the US stock investment community with his article "Google Earnings Preview" published on the investment platform Seeking Alpha. In the article, he mentioned that Google's parent company Alphabet may become the first large tech company to reduce AI capital expenditures.

Alphabet will hold its 2026 second-quarter earnings conference call on July 22nd at 4:30 PM Eastern Time, corresponding to July 23rd at 4:30 AM Beijing Time. According to Alphabet's investor relations announcement, the relevant financial materials will be released before the call. The market expects that AI infrastructure investment, Google Cloud growth, and free cash flow performance will be the key focus of this quarter's earnings report.

In the article, Tokic pointed out that Alphabet has been increasing its AI investment in recent years, including data centers, servers, and cloud infrastructure construction. However, this expansion has also brought cash flow pressure. If AI-related revenue cannot quickly cover capital expenditures, the company may need to rely on debt or equity financing to support its investments, leading to concerns about credit risk and shareholder dilution.

The article also mentioned that although Google Cloud continues to grow rapidly, the growth rate of backlogged orders has shown signs of slowing down, which could weaken the market's optimistic expectations for AI cloud demand. At the same time, new products such as AI search, chatbots, and AI Overview are changing the way users access information, which may have a long-term impact on Google's core profit source, search advertising.

Tokic believes that if the upcoming earnings report fails to prove that AI investment is delivering sufficient returns, Alphabet's capital expenditure plan may face reassessment, and the stock price may come under pressure. For investors, this earnings report is not only relevant to Alphabet's performance but may also serve as a key signal for observing the investment cycle of large tech companies in AI.