Alphabet Beats Expectations and Raises Full-Year Capital Expenditure Forecast, Stock Price Plunges 4% in After-Hours Trading

BlockBeats News, July 23rd, Alphabet announced better-than-expected performance in the second quarter of 2026, with earnings per share of $9.11 and revenue of $11.98 billion, exceeding Wall Street expectations of $2.88 and $116.51 billion, but investors expressed concerns over the company's significantly increased capital expenditure plan and recent profit margin pressure. According to BIT market data, Alphabet's stock price fell to $327.4 in after-hours trading, a 4.24% drop.

Market analysis believes that the reason for Alphabet's significant post-market drop was the company raising its full-year 2026 capital expenditure forecast to $19.5 billion to $20.5 billion, up from the previous estimate of $18 billion to $19 billion. Management stated that this increase reflects the accelerated capacity delivery plan to meet demand. Approximately 60% of the expenditure is expected to be used for servers, with 40% for data centers and network equipment.

The company stated that the demand for AI infrastructure remains strong, but supply constraints continue to hamper capacity delivery speed. Management also mentioned that the third quarter's use of third-party capacity may bring some profit margin pressure, and the integration of Wiz will also pose short-term resistance in 2026. Looking ahead, Alphabet indicated that it expects continued strong demand for Search, YouTube, and Cloud services, with AI capabilities driving increased usage and improving monetization. The company also mentioned that a significant portion of revenue from TPU system sales is expected to be recognized in 2027 rather than 2026.