Alphabet's (GOOGL +0.58%) (GOOG +0.21%) share price fell after providing an investor update.
*Stock prices used were the afternoon prices of July 23, 2026. The video was published on July 25, 2026.
Parkev Tatevosian, CFA has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
Although Warren Buffett no longer heads Berkshire Hathaway, its stock trades and positions continue to attract plenty of attention. At one time, nearly half of the conglomerate's massive stock portfolio consisted of its stake in Apple (AAPL +3.53%), and though it has sold a large number of shares, the iPhone maker remains its largest equity position.
More recently, Berkshire has been adding to its position in Google parent Alphabet (GOOGL +0.58%) (GOOG +0.21%), even as the conglomerate continues to increase its liquidity by selling other companies' shares. Still, that position remains much smaller than its Apple holdings, and Buffett has publicly said he sold Apple "too soon." Despite that admission, Alphabet is likely the better buy among these two "Magnificent Seven" stocks right now, and here's why.
Image source: The Motley Fool.
Comparing Apple and Alphabet Apple now makes up around 21% of Berkshire's portfolio, significantly above the approximately 8% of the portfolio it now has invested in Alphabet.
Moreover, investors have plenty of reasons to like Apple. For one, it has outperformed Alphabet so far in 2026 as a device upgrade cycle, particularly with the iPhone, has helped accelerate its revenue growth.
AAPL data by YCharts.
Nonetheless, Alphabet has delivered higher shareholder returns than Apple over the past one-year and five-year periods. Also, Berkshire Hathaway's most obvious indication as to whether it prefers Alphabet or Apple is its recent activity. Over the last year, it sold more than 52 million Apple shares, and that came after selling more than 600 million shares in prior quarters. That took its position down to around 228 million shares.
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In contrast, Berkshire had never traded Alphabet until the third quarter of 2025, when it made its first buy. It purchased more shares in 2026's first quarter, and then announced in June that it had invested $10 billion more in the company in the second quarter via a private placement, buying those shares directly from Alphabet. Analysts now believe it holds more than 86 million Alphabet shares. Buffett later said that he was behind Berkshire's decision to invest in Alphabet.
Furthermore, Alphabet has become the more prominent AI innovator of these two, particularly with the success of Google Gemini and the market leadership of Waymo in the emerging autonomous vehicle market. In contrast, Apple appears to have little interest in getting involved in the AI infrastructure race, and has signed deals to run its next-generation Apple Foundation Models on the Google Cloud platform.
Despite its competitive advantages, Alphabet has offered investors a more attractive valuation in recent months. It trades at 25 times trailing earnings, well below the Apple price-to-earnings ratio (P/E) of 39. And the Google parent's earnings multiple had fallen to as low as 19 in July last year, giving Berkshire all the more reason to begin buying the stock when it did.
Choose Alphabet over Apple As Berkshire Hathaway's recent behavior confirms, Alphabet is likely the better buy right now, although the iPhone's continued strength and its current upgrade cycle give Berkshire a compelling incentive to hold Apple stock.
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However, over the last year, it is also clear that Berkshire expressed its preference by selling Apple shares and buying Alphabet stock. Moreover, the latter trades at a lower P/E despite Apple's decision to use the Google parent's AI platform.
Thus, investors contemplating this question should probably take their cues from Berkshire's actions and choose Alphabet's stock over Apple's.
The market is getting increasingly skeptical about Google's declining free cash flow margins. I think the market is overreacting. I believe Google is investing aggressively in AI from a position of strength, not one of weakness. Google has been able to infuse AI pervasively across its ecosystem, and it is not looking to slow down.
Close-up of a person's hand holding an iPhone and using Google AI Mode, an experimental mode utilizing artificial intelligence and large language models to process Google search queries, Lafayette, California, March 24, 2025. (Photo by Smith Collection/Gado/Getty Images)
Gado via Getty Images
Apple’s Siri AI isn’t very smart. That’s why future iPhones will pair Siri with Google’s highly regarded Gemini AI.
Seemingly what you’ve just read has been glossed over by the European Union (EU). As news accounts the last few days indicate, the EU has fined Google $1 billion for “unfairly” favoring “its own services on its widely used search engine.”
Except that Google’s “widely used search engine” is widely used for many reasons, including that Google’s services are unrivaled. In other words, Google could deemphasize its services only if it wanted to drive users away from its own “widely used search engine.”
This is worth remembering with a deeper look into the EU’s fine top of mind. It’s not so much about Google as it’s about third-party entities that want their products and services more heavily emphasized on Google’s “widely used search engine.”
Ok, but the third parties can’t have it both ways. Neither can EU regulators.
What makes favoring on Google’s “widely used search engine” so desirable for entities outside Google is how popular Google is among individuals the world over. Which means that Google, to remain Google, must continue to not just meet, but lead the needs of users who have myriad choices. This includes prominently featuring its unrivaled products. About this, Apple instructs.
Popular as the iPhone is, Apple has never hidden from Siri’s limitations. It similarly hasn’t hidden from the fact that at least at present, it doesn’t have a ChatGPT, Copilot, Gemini, Grok, or Meta AI equivalent. Has the latter signaled Apple’s decline? Far from it.
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As was argued here in March, and surely without knowing what’s ahead in AI or anything else (how many inside and outside technology predicted the before and after of November 30, 2022?), Apple has positioned itself brilliantly for the potential commoditization of AI. Rather than spend copious sums developing it, Apple opened its iPhones and other devices up to the genius of others. This once again includes Google and its Gemini AI.
Fully cognizant that the utility of its products is quite a bit greater when paired with technological advances achieved outside its own Cupertino walls, Apple is actively opening its “widely used” devices to non-Apple technology. Which is something EU regulators plainly glossed over in foisting the $1 billion fine on Google.
Really, what is Google supposed to do? Do EU regulators seriously expect it to favor the technology of others on its widely used search engine, particularly if what’s produced by others doesn’t measure up to what’s been developed inside Google? EU regulators aren’t just demanding that Google choose a path of self-harm that is anti-consumer, they’re also demanding that it harm itself in such a way that will imperil the commercial development of the very third parties intent on utilizing Google’s popularity as their own growth strategy.
Which requires a look at the accusatory core of the EU’s case and its $1 billion fine of Google. Implied in the latter is that in favoring its own services over those of outside providers, Google has been restraining the development and growth of outside providers. Nothing could be further from the truth. See Apple again.
As evidenced by Apple’s incorporation of Google’s Gemini into its Siri product, no business can remain great by providing a subpar product. Google’s Gemini will immediately make Apple’s products a great deal more appealing in the marketplace, and so will Google’s suite of products and services be much more appealing the better they are, and regardless of where the improvements come from. Fines aren’t the answer to the EU’s laments, but better third parties are.
SummaryAlphabet's FQ2'26 showed negative free cash flow due to aggressive CapEx, with the pessimism further fed by the management's raised FY2026 guidance.Otherwise, Q2 seasonally reports lower cash flows, with the richer TTM cash flow/revenue ratio of 41.6% and the growing cloud backlog mitigating overbuilding concerns.These developments underscore GOOG's AI-driven growth pains, since hefty CapEx must first happen before rich compute/ad monetization may occur.Despite the premium valuations, GOOG's strong balance sheet, oversold technicals, and rich upside potential to my LTPT of $431.70 justify the upgraded Buy rating.Short-term risks include insider selling, SPCX lockup expiries, and seasonal weakness in August/September, with a Buy Zone in the $290s–$320s offering better entries. Techa Tungateja/iStock via Getty Images
I previously downgraded Alphabet Inc., aka Google (GOOG, GOOGL, GOOG:CA), as a Hold in May 2026, attributed to the reduced margin of safety from the outsized rally in April/early May 2026.
In this article, I
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Analyst’s Disclosure: I/we have a beneficial long position in the shares of GOOG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Alphabet (GOOG +0.21%) (GOOGL +0.58%) delivered a solid second-quarter earnings report on Wednesday. Cloud revenue was up by 82% year over year, and the Gemini app reached 950 million monthly active users.
Some investors were spooked when Google's parent company raised its capital expenditures guidance, implying that it will spend up to $205 billion this year, which is likely why the stock slipped by more than 6% in Thursday trading. However, that isn't a problem for these three AI companies, which are poised to benefit from higher data center capital expenditures.
Image source: Getty Images.
Cipher Digital Cipher Digital (CIFR -10.34%) builds AI data centers and leases them to hyperscalers like Alphabet. It's a play on the need for electricity to power those massive server clusters, and Cipher Digital can keep its costs lower than neoclouds since it does not provide the chips or software. Tenants must bring those resources themselves.
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It's a convenient model for customers that use custom chips. Alphabet has been prioritizing its custom-made Tensor Processing Units (TPUs) for its products and is even offering them to smaller cloud companies, directly competing with Nvidia. Cipher Digital's co-location model offers more flexibility and lower overhead costs than Iren or Nebius, which have both committed to vast Nvidia chip fleets.
Cipher Digital is on target for a 4.2 gigawatt portfolio capacity by 2030, and it's continuing to sign new hyperscaler tenants. While net operating income remains low since it takes time to turn contracts into recognized revenue, Cipher Digital projects substantial growth in its net operating income next year. It's supposed to rise from $86 million to $646 million based on secured contracts that just need AI capacity.
Revenue will also be quite predictable due to the 15-year leases that Cipher Digital has its tenants sign. Alphabet's commitment to higher capital expenditures suggests Cipher Digital's AI data centers are about to get more demand.
Broadcom Chipmaker Broadcom (AVGO -2.88%) is the leading designer of application-specific integrated circuits (ASICs). It collaborates with many tech giants, including Alphabet, on these custom chips. The TPUs Alphabet wants to sell or lease to cloud companies are designed by Broadcom.
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Alphabet's decision to make its TPUs an even larger part of its business will directly translate into more sales for Broadcom. That extra demand for chips and the ongoing shortages of AI processors will give Broadcom more leverage to charge higher prices and enhance its margins.
Broadcom is already doing quite well. Revenue increased by 48% year over year in its fiscal 2026 second quarter. Its AI semiconductor business accounted for almost half of its total revenue, and that segment grew by 143% year over year.
Since the AI semiconductor segment continues to make up a larger percentage of total revenue, Broadcom is likely to deliver accelerated revenue growth rates in the upcoming quarters. CEO Hock Tan told investors to expect AI-related semiconductor revenue to "grow over 200% year over year to $16.0 billion." That was before Alphabet revealed its higher capex guidance to investors.
Micron Micron's (MU -7.24%) memory chips and components occupy prominent positions in data center, including within the processors that Broadcom designs. Higher demand for TPUs will benefit Micron as well, but the company's memory also goes into general-purpose data center GPUs like the ones that Nvidia produces.
Even though Micron's stock price has more than tripled this year, it should have more room to rally. In its fiscal 2026 third quarter, evenue more than quadrupled year over year, and management's guidance for $50 billion in fiscal 2026 fourth-quarter revenue would be a meaningful sequential jump from its $41.5 billion in fiscal Q3 revenue.
Continued shortages of memory have helped Micron secure high profit margins for its chips. It's also signing multiyear deals with customers to make future revenue more predictable and minimize the hit it will take when supply catches up with demand and the cycle shifts from the boom phase to the bust phase.
As demand for Alphabet's AI-enabled products grows, the company will need more memory chips. Google Cloud, Gemini, Waymo, and even Google's search engine all rely on these chips to function properly. Higher capital expenditures from tech companies broadly often translate into more sales for Micron.
Conservative activist Robby Starbuck landed a major legal victory against Google on Friday as his defamation lawsuit will be able to move forward, according to a Delaware Superior Court ruling.
Last October, Starbuck filed a suit against Google seeking at least $15 million, alleging the company’s artificial intelligence programs defamed him by falsely portraying him as a “monster” to millions of users in the form of “AI hallucinations.”
“The Court views these allegations as sufficient to support a claim for emotional distress damages at this stage in the proceedings, being sufficiently well-pled to proceed to discovery and flesh out the allegations,” Judge Meghan Adams ruled in the court filing.
Starbuck touted the victory towards discovery on social media.
“Was it directed to lie about me due to political bias, as their AI alleged? Was it a rogue programmer? A negligently released product? An executive demanding this? Poisoned training? A political bias operation? We don’t know the answers to those questions yet but in discovery we get to find those answers and depose the people relevant to our case,” Starbuck wrote on X. “Sunlight is the best disinfectant, and it’s about to get bright in here. Discovery means we get to find out what Google knew, who knew it and why they allowed their AI products to continue spreading these horrific lies.”
Robby Starbuck landed a major legal victory against Google on Friday as his defamation lawsuit will be able to move forward. William DeShazer for NY Post Starbuck later wrote, “Google is one of the most powerful companies on earth. It may even be THE most powerful. But today, on July 24th 2026, they failed to shut the courthouse doors on us. In short, David landed a shot on Goliath today. Why? Not because David is so great but because God is and the human pursuit of justice IS righteous. Today is a historic victory and now we’ll prepare to win the rest of this fight, not just for me, but for all of us.”
In a statement to Fox News Digital, Starbuck marveled at the “historic decision.”
“As we enter a time when AI increasingly dominates everything around us, we must ensure that it can’t hurt people. What was done to me should never happen to anyone else,” Starbuck said. “We must draw a line in the sand that the AI being built can’t harm humans whether it’s via defamation or future physical harm. It’s my hope that this case can be the line in the sand. I very much look forward to discovery where we can dive deep on why and how this happened, as well as if any political bias played a role.”
Starbuck filed a suit against Google seeking at least $15 million, alleging the company’s artificial intelligence programs defamed him. GODOFREDO A VASQUEZ/EPA/Shutterstock Google did not immediately respond to a request for comment.
The lawsuit claims Google’s AI platforms – Bard, Gemini and Gemma – have continued to display false statements about Starbuck since 2023, despite multiple cease-and-desist letters. The false statements included claims he had been accused of sexual assault, rape and harassment.
The suit also claims Gemini itself “stated” that its alleged falsehoods about Starbuck were shown to 2,843,917 unique users.
“The breaking point for me was when they accused me of child rape. That was where I was like, ‘We have to just go forward with the lawsuit. They’re clearly not taking this seriously. It’s escalating into something much more serious and crazy,’” Starbuck previously told Fox News Digital.
Starbuck said that the assassination of Turning Point USA founder Charlie Kirk made him realize “some crazy person could believe this stuff,” prompting him to set the record straight.
Fox News’ Brian Flood and Taylor Penley contributed to this report.
Key Takeaways More Mag 7 earnings are on their way, with AMZN, META, AAPL, and MSFT all slated to report soon. Alphabet's results showed a solid job of operationalizing and monetizing AI capabilities.Overall, total S&P 500 earnings for Q2 are expected to grow 39.1% YoY on 12.3% higher revenues. The market reaction to Alphabet’s (GOOGL - Free Report) Q2 results has significantly raised the bar for its Magnificent Seven peers that are on deck to report results this week, namely Microsoft (MSFT - Free Report) and Meta Platforms (META - Free Report) on Wednesday, July 29th, and Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) on Thursday, July 30th.
The raised bar isn’t solely related to AI-centric capex spending plans and the effect that is having on cash flows, though that is a very critical issue for most investors, but also to the impressive operating momentum that Alphabet showed in its cloud business. Performance on the cloud front will be closely watched for Amazon and Microsoft, with the latter’s recent showing on this front having been less than satisfactory.
Alphabet showed further acceleration in its cloud business, with Google Cloud revenues up +82% from the same period last year. This follows year-over-year Google Cloud revenue growth of +45.2% in the preceding period (2026 Q1), +38.5% in 2025 Q4, and +35% in 2025 Q3. Alphabet’s results on the search, advertising, and AI monetization fronts were equally impressive.
Alphabet’s results show that it is doing a better-than-expected job of operationalizing and monetizing AI capabilities. But this wasn’t enough to convince market participants to buy the stock, with another capex hike becoming the trigger for the sell-off.
Alphabet’s free cash flow moved into negative territory for the first time in its public life, with management indicating that the Q2 cash flow trends will likely persist over the coming quarters as well, with a combination of debt and equity issuance making up for the shortfall. Alphabet shares the capex and cash flow issues with Amazon, Meta, and, to a smaller extent, Microsoft.
Alphabet’s reported earnings benefited from the unrealized gain on its SpaceX stake, which accounted for an estimated $77.4 billion in the company’s $112.1 billion net income. If we use Alphabet’s reported Q2 earnings, then quarterly earnings for the Mag 7 group as a whole are on track to increase +83.1% from the same period last year on +26% higher revenues, as the chart below shows.
Image Source: Zacks Investment Research
The Q2 earnings growth pace for the Mag 7 group becomes a relatively more ‘reasonable’ +28% once Alphabet’s non-operating unrealized gain is stripped out.
The chart below shows the Mag 7 group’s earnings and revenue growth on a calendar year basis.
Image Source: Zacks Investment Research
Importantly, the Mag 7 group has consistently enjoyed a steadily improving earnings outlook, with analysts raising their estimates, as the chart below shows.
Image Source: Zacks Investment Research
It is useful to keep in mind that the Mag 7 group is on track to bring in more than 27% of all S&P 500 earnings this year, up from 16.4% of the total in 2020, and accounts for 32.2% of the index’s market capitalization.
Q2 Earnings Season Scorecard
Through Friday, July 24th, we have seen quarterly results from 135 S&P 500 members or 27% of the index’s total membership. Total earnings for these are up +67.8% from the same period last year on +12.6% revenue gains, with 87.4% of the companies beating EPS estimates and 79.3% of them beating revenue estimates.
The comparison charts below put the Q2 earnings and revenue growth rates for these index members in a historical context.
Image Source: Zacks Investment Research
The comparison charts below put the Q2 EPS and revenue beats percentages in a historical context.
Image Source: Zacks Investment Research
As you can see above, the Q2 EPS beats percentage for this group of 135 index members is a new 5-year high, while the revenue beats percentage is toward the high end of the 5-year range.
The unusually strong earnings growth rate of +67.8% and revenue growth of +12.6% are benefiting from Micron and Alphabet’s blockbuster results.
The chart below shows the reported Q2 earnings growth picture, with and without Alphabet and Micron.
Image Source: Zacks Investment Research
As you can see above, Micron and Alphabet account for more than 60% of all reported earnings growth at this stage, an unusual level of earnings concentration.
The Q2 reporting cycle ramps up in a big way this week, with more than 800 companies on deck to report results, including 172 S&P 500 members (34% of the index’s membership). In addition to the aforementioned Amazon, Apple, Microsoft, and Meta, this week’s line-up ranges from Exxon and Chevron to Visa and Mastercard, Starbucks, Ford, and many other bellwether operators.
The Earnings Big Picture
The chart below gives you a big-picture view of the overall earnings picture. It highlights current Q2 expectations right alongside actual results from the past four quarters and forecasts for the next four (including 2026 Q2).
Image Source: Zacks Investment Research
As you can see here, total S&P 500 earnings for 2026 Q2 are expected to increase by +39.1% compared to the same period last year on +12.3% higher revenues.
Of the 16 Zacks sectors, 11 are expected to have positive earnings growth in Q2, with Energy (earnings growth of +126.1%), Tech (+91%), Basic Materials (+49.1%) and Finance (+24%) as the major growth drivers.
Q2 earnings growth drops to +14.3% from +39.1% once the Tech sector’s substantial contribution is excluded.
The +126.1% earnings growth for the Energy sector is meaningful, but aggregate earnings growth would still be +35.2% on an ex-Energy basis.
The Tech sector has been a pillar of earnings growth over the last two years, and the sector is expected to continue playing that role in Q2 and beyond. The chart below shows current earnings and revenue growth expectations for the sector relative to what the sector actually reported in the preceding two periods and what is expected in the following three quarters.
Image Source: Zacks Investment Research
The Tech sector is unlike the other 15 Zacks sectors, as it alone brings in 41% of all S&P 500 earnings and accounts for 45.6% of the index’s total market capitalization.
As noted earlier, Alphabet’s Q2 results included a huge boost from a non-operating side, specifically the unrealized gain it has been forced to book on its SpaceX stake following that company’s IPO. Alphabet isn’t alone in having an outsized impact on the sector’s growth pace, as Nvidia and Micron are also exerting an outsized influence.
Excluding the contribution from Alphabet, Micron and Nvidia, Q2 earnings for the rest of the Zacks Tech sector would be up +27.6% (vs. +91% otherwise).
The chart below shows the Tech sector’s earnings growth picture, with and without these three companies.
Image Source: Zacks Investment Research
The chart below shows the aggregate growth picture for the S&P 500 index on a calendar year basis.
Image Source: Zacks Investment Research
As with Q2 expectations, the Tech sector has an outsized impact on the annual earnings picture as well. Total Tech sector earnings are expected to increase +40.1% from the same period last year on +18.5% higher revenues.
Excluding the Tech sector’s substantial contribution, total S&P 500 earnings for the year would be up +13.2% (vs. +22.4% otherwise).
As we saw with Q2 expectations, contributions from Alphabet, Micron, and Nvidia are also significant here, as the chart below shows.
Image Source: Zacks Investment Research
The way to read this chart is that the +22.4% earnings growth expected in 2026 drops to +13.2% once the Tech sector is excluded and +15% once only Alphabet, Nvidia, and Micron are excluded from the index. In other words, one-third of all S&P 500 earnings growth in 2026 is coming from these three Tech companies.
For a detailed view of the evolving earnings picture, please check out our weekly Earnings Trends report here >>>> S&P 500 Earnings Beats Hit 5-Year Highs as Growth Accelerates
LOS ANGELES, July 24, 2026 (GLOBE NEWSWIRE) -- The Law Offices of Frank R. Cruz continues its investigation of Alphabet Inc. (“Alphabet” or the “Company”) (NASDAQ: GOOG) on behalf of investors concerning the Company’s possible violations of federal securities laws.
IF YOU ARE AN INVESTOR WHO LOST MONEY ON ALPHABET INC. (GOOG), CLICK HERE TO INQUIRE ABOUT POTENTIALLY PURSUING A CLAIM TO RECOVER YOUR LOSS.
What Is The Investigation About?
On July 16, 2026, Bloomberg news reported that Alphabet’s Google is “months behind schedule on delivering Gemini 3.5 Pro, its most powerful flagship AI model” due to the Company’s ongoing coding efforts. Specifically, “[l]ate last month, Google updated the data being used to train Gemini in an attempt to improve [its] skills, but the results were disappointing.”
On this news, Alphabet’s stock price fell $16.40, or 4.4%, to close at $353.81 per share on July 16, 2026, thereby injuring investors.
Then, on July 22, 2026, Alphabet released its second quarter 2026 financial results, announcing, among other things, a significant expansion of expected full year 2026 capital expenditures to $195 billion to $205 billion. The Company also disclosed that, for the quarter, it had a negative free cash flow of $5.9 billion. The Company further disclosed that "given the supply constrained environment, we plan to expand the use of third-party capacity in Q3 as a bridging strategy," however this "will create modest margin pressure in the near term."
On this news, Alphabet’s stock price fell as much as 7% during intraday trading on July 23, 2026, thereby injuring investors further.
Contact Us To Participate or Learn More:
If you purchased Alphabet securities, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact us:
The Law Offices of Frank R. Cruz,
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If you inquire by email, please include your mailing address, telephone number, and number of shares purchased.
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President Donald Trump on Friday defended his Department of Justice's issuance of subpoenas to New York Times reporters, as it was revealed that Google also received a subpoena in the same criminal investigation of the leak of information about the president's new Air Force One plane.
Trump's comments on the subpoenas came a day after the DOJ told a New York federal judge it was withdrawing those subpoenas for grand jury testimony by Times reporters and their phone records. The DOJ is investigating the leak of concerns about the security measures on the president's Qatari-donated plane, which the Times wrote about earlier in July.
Judge Arun Subramanian had warned prosecutors on Thursday that if they did not voluntarily withdraw the subpoenas, he would quash them.
"We're not after journalists," Trump told reporters in the Oval Office on Friday. "We're after leakers. We're after people that are cowards, people that are unpatriotic, people that are treasonous in many cases."
"And the way you find them is through journalists," the president said.
"That person should be found, and the way you find them is to tell the journalist, if it's something having to do with national security, you tell the journalist: 'Who is it?' " Trump said.
"And we have a long way to go with that case," he added.
At around the same time that Trump was talking, a letter that lawyers for Google sent Friday to Subramanian was unsealed in U.S. District Court in Manhattan on the order of the judge.
The letter revealed that Google on July 16 was issued a subpoena from a grand jury at the behest of the DOJ seeking "subscriber information associated with a phone number."
The subpoena was sent to Google a day after lawyers for the Times moved to quash subpoenas issued to their reporters.
Google also received on July 16 an order not to disclose to the phone number subscriber that fact that it had received a subpoena for their information.
In their letter on Friday, Google's lawyers asked Subramanian to vacate the non-disclosure order, which had been signed by a magistrate judge, arguing that the order violates the First Amendment of the Constitution, which established the right to free speech.
"The government has admitted that, at the time of its application for the NDO, it 'inadvertently included language that the investigation was "not public" when the fact of the investigation was public,' " the letter said.
Subramanian granted the request to vacate the NDO, a court filing shows.
Alphabet Inc. delivered Q2 results with 24% revenue growth and strong AI-driven monetization across Search, Cloud, and YouTube. GOOG's aggressive AI CapEx strategy led to negative free cash flow and raised 2026–2027 CapEx guidance, fueling investor concerns about capital intensity. Google Cloud revenue nearly doubled to $24.8B with margin expansion, while AI tools are driving higher ad conversions and enterprise adoption.
Despite delivering strong second-quarter results, Alphabet (GOOGL +0.58%) (GOOG +0.21%) shares sank following its results. The company upped its capital expenditures (capex) forecast, as it continues to plow money into AI infrastructure. The stock is still up 65% over the past year, although it's off more than 20% from its earlier highs this year.
Let's dive into the company's Q2 results and prospects, and why I think this is a great opportunity to buy the stock.
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Alphabet's cloud computing unit, Google Cloud, once again stood out in Q2. Revenue for the segment continued to accelerate, surging 82% to $24.8 billion. That compares to 63% growth in the first quarter, 48% growth in the fourth quarter of 2025, 34% growth in the third quarter of 2025, and 32% growth in Q2 of last year. Perhaps even more impressive, though, is the operating leverage that the unit has been seeing.
Google Cloud's operating income soared from $2.8 billion a year ago to $8.8 billion, a more than threefold increase. Its cloud backlog, meanwhile, rose from $462 billion at the end of Q1 to $518 billion. This includes both cloud agreements and orders for its Tensor Processing Units (TPUs).
The reason the stock sold off, though, is that Alphabet once again increased its capex budget. It now plans to spend between $195 billion and $205 billion on AI data center infrastructure this year, up from a prior forecast of $180 billion to $190 billion, as it remains capacity-constrained. Its original capex guidance was for between $175 billion and $185 billion for 2026. It also said that its spending on AI infrastructure will be significantly higher next year.
Alphabet's core Google Search business, meanwhile, saw revenue climb 17% to $63.3 billion. The integration of Gemini into its ad platform is helping improve ad quality and relevance. At the same time, AI-powered features are helping fuel more search usage. Its stand-alone Gemini app also now has more than 950 million monthly users.
YouTube continues to perform well, with ad revenue jumping 13% to $9.9 billion. Meanwhile, subscription (which includes YouTube, its Gemini App, cloud storage, and music) and device revenue rose 15% to $12.9 billion. Google Network revenue continues to be a weak spot, with revenue down nearly 1%.
Overall, Alphabet's total quarterly revenue increased by 24% to $119.8 billion, above the $116.9 billion consensus, as compiled by LSEG. Earnings per share (EPS) soared from $2.31 to $9.11, but that included a large gain on its Space Exploration Technologies holdings.
Image source: The Motley Fool.
Why Alphabet stock is a buy While the market punished Alphabet for its capex plans, the company is clearly demonstrating that it is getting strong returns on its investments. Not only is Google Cloud revenue surging, but its segment operating margins have also greatly improved. At the same time, its AI investments are also helping drive strong growth within its Google Search business.
Given the cost edge the company currently has with its TPUs, the right move is to press its advantage and spend aggressively on AI infrastructure. This is the smart decision, regardless of how the stock reacts.
The stock currently trades at a forward price-to-earnings ratio (P/E) of around 22 times 2026 analyst estimates. That's an attractive valuation for a company that is the most complete AI player, especially given its large investments in SpaceX and Anthropic.
Alphabet remains well-positioned, and its growth prospects look bright. While it has faced some delays with its Gemini Pro 3.5 model due to wanting to improve its agentic coding features, it has the resources to catch up in this area. Meanwhile, what it has been best at is creating models that work well in the consumer space, which it can monetize better than any other company, given its distribution and ad network advantages.
The worrying sign for Wall Street’s hyperscalers following Alphabet’s Q2 2026 earnings is that it’s not enough to beat revenue expectations anymore; investors demand capex control.
Alphabet (NASDAQ:GOOGL) tumbled 7.7% following its earnings call, which was largely comprised of good news. The Google parent recorded its 12th consecutive quarter of strong revenue gains, comfortably beating expectations.
In terms of revenue, Alphabet’s quarterly results weighed in at $119.8 billion compared to $116.93 billion expected by LSEG, while adjusted earnings per share (EPS) fell $0.04 short of expectations, reaching $2.85.
Alphabet’s cloud businesses also recorded more than $24 billion throughout the quarter, while its net profit tripled to more than $112 billion.
The Google Gemini app also posted significant growth, with a confirmed 950 million monthly active users.
Despite this, Alphabet’s stock experienced a steep decline due to more signs that the company’s capital expenditure is gathering momentum. With sell-offs triggered by the Google parent’s quarterly earnings, investors may be set for a period of heavy volatility for Wall Street hyperscalers as capex continues to fall under the microscope.
Why are Investors Selling Alphabet? Wall Street’s Magnificent Seven collective of AI-focused market giants has continued to stagnate as investors come to terms with heavy capital expenditure trends.
However, it’s this heavy spending on AI infrastructure that is prompting widespread revisions over the long-term value of hyperscalers.
The reason investors are selling Alphabet stock despite its Q2 revenue beat is that the company increased its capital expenditure estimate for the full year to $205 billion, representing another jump from the $190 billion recorded last quarter.
Alphabet’s chief financial officer, Anat Ashkenazi, put the capex increase down to growing demand and the company’s attempts to accelerate the delivery of capacity to accommodate it. She also confirmed that there’s an expectation that capex will continue to increase "significantly" in 2027, with more details set to be revealed at a later date.
"Investors are uneasy about capex because Alphabet’s price-to-earnings (P/E) ratio currently stands at 26.48x, and speculative spending opens the door to more uncertainty over whether the company can ever reach such lofty revenue streams in the future," explained Vsevolod Smirnov, CMO at Just2Trade.
"Alphabet has more than tripled in value during the AI hype phase, and its recent struggles are merely a result of investors looking at the stock’s fundamentals and asking ‘what’s next?’"
Earnings Fears for Mag7Another stock that’s been more heavily impacted by Q2 capex is Tesla, which revealed that capital expenditures have surged 142% year-on-year in the second quarter to $5.79 billion, with more than $25 billion in capex expected this year.
With a seismic P/E of 347x, Tesla’s stock is more prone to coming under investor scrutiny, and its losses of more than 13.5% since Wednesday morning suggest that there’s set to be far more volatility ahead as spending continues to increase.
Although Tesla isn’t a hyperscaler by definition, its spending mirrors concerns about the rate of spending throughout its high-tech counterparts.
At their current capex rates, LSEG has estimated that the likes of Alphabet, Amazon, Microsoft, Meta Platforms, and Oracle are set to spend more on their capital expenditures than they generate in free cash flow by 2027, which directly calls into question the sustainability of these major AI buildouts.
Make or Break Earnings SeasonThe challenges faced by Alphabet and Tesla have underlined the importance of the upcoming earnings season for the Magnificent Seven and hyperscaler firms.
Over the weeks ahead, we’re likely to see far greater levels of volatility as investors seek out indications as to whether runaway spending rates are set to continue impacting stocks for the foreseeable future.
Worryingly, with the likes of Alphabet and Tesla already confirming that more spending is on the way, Q2 earnings could become a difficult period if more Mag7 players follow a similar trajectory, even despite revenue beats.
Capital expenditures will be firmly in the spotlight during the weeks ahead as we continue to look for cues as to whether more spending is ahead and if their impact could drive more doubt about the sky-high valuations throughout the S&P 500’s leaders.
What’s Next for the AI Rally? The stuttering start to Q2 earnings season will be fuelling claims that we’re in the midst of an AI bubble, but it’s also worth remembering that the scale of the potential that the technology holds is unprecedented compared to previous tech bubbles on Wall Street.
Last year’s estimates from UN Trade & Development suggested that the AI market was projected to reach a value of $4.8 trillion by 2033, cementing its emergence as a dominant frontier technology.
This could assist high-spending hyperscalers in living up to their valuations despite significant free cash flow risks in the short term.
This uncertainty over the trajectory of the AI boom will fuel more volatility in the wake of earnings season, which could provide some short-term trading opportunities for investors who are more bullish on the future prospects of the industry.
Disclosure: On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer. Dmytro Spilka does not intend to make a trade in any of the securities mentioned above in the next 72 hours.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
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SummaryAlphabet Inc. delivered a stunning Q2, with diluted EPS surging from $2.31 to $9.11 year-over-year.GOOGL’s equity gains from SpaceX and Anthropic are legitimate, reflecting early, successful investments rather than accounting gimmicks.Cloud segment operating income soared 81.8%, and selling TPUs is a rational monetization strategy in a competitive, supply-constrained AI market.I view the recent GOOGL selloff as a compelling buying opportunity, with negative FCF justified by aggressive, high-confidence investments in compute capacity.This idea was discussed in more depth with members of my private investing community, The Pragmatic Investor. Learn More » Pla2na/iStock via Getty Images
Thesis Summary Alphabet Inc.'s (GOOGL) (GOOG) second quarter was stunning in many ways.
Diluted EPS jumped from $2.31 to $9.11 YoY, but investors don’t like the reasons.
Meanwhile, the Cloud segment printed 80% operating growth, but again, the market
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Alphabet (GOOG +0.30%) (GOOGL +0.61%) is one of the largest companies in the world, sitting in third place right now. It's widely considered an artificial intelligence (AI) leader, something that wasn't true just a year and a half ago. It just had another phenomenal announcement and showcased once again why it's a strong candidate for best AI stock to own.
Furthermore, Alphabet's stock sank following this announcement, underscoring the market's short-sightedness. The market wants profits now with no spending, and those two things are incompatible. This unrealistic expectation makes now a great time to buy Alphabet shares if you've missed out, and the discount may not last for long.
Image source: The Motley Fool.
Google Cloud continues to amaze Alphabet is a conglomerate based around the Google family of products. That means that it's an advertising business, but is quickly trying to pivot to become an AI-first one. Despite its Google Search business being a pretty mature business unit, it saw revenue growth of 17% year over year in Q2. That makes it the strongest-performing Google Platform -- quite the feat for its size. Part of Google's revenue comes from AI-driven search results, but there is a more focused AI business unit: Google Cloud.
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Google Cloud is where investors are going to see the most immediate benefit of AI revenue, as there are several clients running AI workloads on Google Cloud's servers. The computing capacity is rented out to these clients, creating a continuous revenue flow for Alphabet. This division posted an incredible quarter during Q2, with revenue rising 82% year over year. That's a significant acceleration over Q1's 63% growth.
As another boost, Google Cloud's operating margin rose from 32.9% in Q1 to 35.6% in Q2. There are major improvements going on here, and with a $514 billion backlog to churn through (Google Cloud generated $24.8 billion in revenue during Q2), there is a ton of growth ahead for the foreseeable future.
However, Alphabet must spend money to continue growing Google Cloud, which caused it to increase its capital expenditure guidance to $195 billion to $205 billion for the year. That sank the stock, as the market was already concerned that Alphabet was spending too much. I think this is just short-term thinking by the market, as Alphabet's spending strategy is clearly paying off.
With the stock selling off following earnings, I think now is the perfect time to hop in and buy shares. Sales on Alphabet's stock don't come around often, and you should consider taking advantage of this one. The Google parent is building a durable AI business here.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of GOOG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
An exchange-traded fund holding the S&P 500 minus those seven names is outperforming the Magnificent Seven group by nearly 17 percentage points this year.
Tesla Inc. (NASDAQ:TSLA) missed on earnings, with free cash flow turning negative.
Tesla lost 14.52% on the day. Alphabet lost 7.13%.
Last year the trade ran the other way. MAGS returned 22.99% in 2025 against 15.63% for XMAG.
QUICK CONTEXT: Magnificent Seven Lose Their Market GripThe Magnificent Seven have stopped carrying the market in 2026. Through Thursday’s close, an equal-weight basket of Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla was down about 3.6% for the year, while the broader S&P 500 had gained roughly 8.2% over the same period.
The weakness is uneven but severe. Tesla had fallen about 29%, Microsoft nearly 21% and Meta 8%. Alphabet and Amazon were barely positive. Apple, up roughly 18.5%, and Nvidia, up 12%, were the only clear winners by a wide margin, leaving the group increasingly dependent on two stocks.
The split widened on July 23, when all seven shares fell and the equal-weight basket dropped about 4.7%. Alphabet and Tesla led the decline, putting fresh attention on whether enormous commitments to artificial intelligence, data centers, robotaxis and robotics can generate adequate returns for future shareholders.
That matters because these companies remain among the largest weights in major U.S. indexes. Their earlier gains made benchmarks unusually dependent on a small technology cluster; their 2026 underperformance has broadened market leadership. Investors are no longer rewarding AI spending automatically. They want clearer evidence that escalating investment will produce durable cash flow and profits.
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Meta (NASDAQ: META | META Price Prediction) and Alphabet (NASDAQ: GOOG) have both reported, and the results paint two very different pictures of AI-era Big Tech.
Meta’s Q1 numbers leaned on a one-time tax windfall and aggressive infrastructure spending. Alphabet’s Q2, released July 22, 2026, showcased a cloud business finally hitting hyperscale velocity. Same sector, wildly different setups.
Ad Machines Hum, but Cloud Steals the Show Meta posted EPS of $10.44 against a $6.66 estimate, on revenue of $56.31 billion, up 33.08% year over year. Strip out the $8.03 billion tax benefit tied to CAMT and R&D treatment, and normalized EPS sits closer to $7.31. Still a beat, still real, just less spectacular. Ad impressions rose 19% YoY and average price per ad climbed 12%.
Alphabet’s headline was cleaner where it counts. Revenue reached $119.796 billion, up 24.23%, the 12th consecutive quarter of double-digit growth. Google Cloud jumped to $24.768 billion, an 82% surge, accelerating from Q1’s 63%. Sundar Pichai told investors “nearly 90% of the Fortune 100” now use Gemini Enterprise, and Gemini models process 22 billion API tokens per minute.
One Funds AI With Cash. One Borrows Heavily. Lens Meta Alphabet 2026 Capex Plan $125B to $145B $175B to $185B Free Cash Flow +$12.39B -$5.855B P/E Ratio 23 14 Growth Engine Ad platform + Reality Labs Cloud + Search + Waymo Alphabet raised roughly $70 billion in combined equity and debt, suspended its buyback, and pushed long-term debt from $46.5 billion to $98.2 billion. Interest expense grew nearly 5x year over year.
Meta is spending heavily too, but it self-funds. Reality Labs still bleeds $4.03 billion per quarter, and Zuckerberg said the goal is to “deliver personal superintelligence to billions of people.” Ambitious. Expensive.
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The Next Test Is Whether Capex Pays Off Both stocks slid last week. Meta fell 7.95%; Alphabet dropped 7.64%. But the year-to-date gap tells the real story: Alphabet is up 9.1% while Meta is down 4.82%.
I will be watching whether Alphabet’s cloud momentum can absorb the interest burden, and whether Meta’s Superintelligence Labs produces something monetizable before Reality Labs losses compound further.
Why I Lean Toward Alphabet on Value Right Now On the cheaper AI infrastructure story, Alphabet screens as the better value on current multiples. A P/E of 14 for a company growing 24% with an 82% cloud engine feels mispriced, even with the debt. The 58 analyst buys and zero sells line up with that read.
I would not fault a Meta bull though. Ad pricing power, a fortress balance sheet, and 25% model-implied upside keep it interesting. A quarter without a tax windfall would offer a cleaner read on the underlying earnings power. If Alphabet’s free cash flow stays negative into Q4, I revisit. For now, the cheaper stock with the faster-growing cloud carries the more defensible setup on the numbers.
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I bought more Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) on Thursday, watched the stock close down 7.13%, and I plan to buy more next week. The Q2 report the market called a boondoggle is exactly the receipt I needed to keep clicking buy.
Here is the setup in human terms. Alphabet just posted the strongest quarter in its history, then raised roughly $70 billion in combined equity and debt, doubled long-term debt to $98.2 billion, suspended the buyback, and printed negative free cash flow of -$5.855 billion. The market read that as balance sheet weakness. I read it as CFO Anat Ashkenazi doing textbook asset-liability matching, funding 15-to-30-year infrastructure with long-dated capital while preserving working capital for the operating business. That is a company front-loading capex to clear a Cloud backlog above $460 billion.
The Receipts Revenue landed at $119.796 billion, up 24.23% YoY, the 12th straight quarter of double-digit revenue growth. EPS of $9.11 beat the $3.0427 estimate, the 11th straight EPS beat. Operating income rose 30.38% YoY. Operating margin expanded to 34%. The company that supposedly cannot self-fund grew operating cash flow 40.8% YoY to $39.069 billion in a single quarter.
Cloud is the story I keep buying. Google Cloud revenue hit $24.768 billion, up 82% YoY. Nearly 90% of the Fortune 100 now runs Gemini Enterprise. Gemini processes 22 billion API tokens per minute. The Gemini App has 950 million monthly active users. Distribution at that scale does not show up on a competitor slide deck the following week.
Then the balance sheet everyone panicked over. Total assets are $921.983 billion. Shareholders’ equity is $640.480 billion. Cash and short-term investments sit at $242.474 billion. The $98.2 billion in long-term debt is a rounding item against that equity base.
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Why Not the Obvious Alternative Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) are the names most readers reach for first, and I own some of both. The number that keeps my capital moving to Alphabet is cloud growth of 82% YoY on a $24.768 billion quarterly base, layered on a Search franchise that still delivered 17% YoY growth in Q2. I am paying roughly 26 times earnings for that combination, with a free cash flow yield near 3.93%. Azure and AWS are excellent businesses. Neither is showing me an 82 handle on cloud growth this quarter.
The Real Risk Capex could keep running ahead of revenue longer than I want. The $180-190B capex plan Reddit is asking about is real, and interest expense rose nearly 5x YoY. If enterprise AI demand stalls, that spending sits on the books as depreciation. What has not changed for me: the backlog is already contracted, operating margin is expanding while capex doubles, and the equity base absorbs the debt with room to spare.
Forward conviction is simple. I am buying a business that grew revenue 24% while the market marked it down for spending too much money to grow faster. That is the trade I keep taking with a straight face.
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LOS ANGELES--(BUSINESS WIRE)--Glancy Prongay Wolke & Rotter LLP, a leading national shareholder rights law firm, continues its investigation on behalf of Alphabet Inc. (“Alphabet” or the “Company”) (NASDAQ: GOOG) investors concerning the Company's possible violations of the federal securities laws.IF YOU ARE AN INVESTOR WHO LOST MONEY ON ALPHABET INC. (GOOG), CLICK HERE TO INQUIRE ABOUT POTENTIALLY PURSUING CLAIMS TO RECOVER YOUR LOSS.What Happened?On July 16, 2026, Bloomberg news reported t.
Key Takeaways Alphabet leads search with 91.27% share as AI Overviews and AI Mode deepen user engagement.Google Search & Other revenues rose 17% to $63.3B, helped by retail, finance and better query monetization.AI Mode connects Instacart, Canva and YouTube Music, letting users complete tasks without leaving Search. Alphabet’s (GOOGL - Free Report) Search-related endeavors have received a massive push through AI integrations. The company is leading the search domain with 91.27% market share, followed by Microsoft’s (MSFT - Free Report) Bing, with 4.68% share, Yahoo!’s 1.28%, Yandex’s 0.79%, DuckDuckGo’s 0.67% and Baidu’s (BIDU - Free Report) 0.46%, per the latest data from StatCounter.
Alphabet’s dominance is being reinforced by rapid AI innovation rather than disrupted by it. On the second-quarter 2026 earnings call, the company highlighted that AI Overviews and AI Mode have been integrated into a single seamless Search experience, helping drive higher user engagement and incremental search queries. AI Mode has already surpassed one billion monthly active users, while Google continues to send billions of clicks to websites every week through its AI-powered search features, addressing concerns that AI could reduce web traffic.
Search monetization also remains strong. Google Search & Other revenues climbed 17% year over year to $63.3 billion, driven primarily by retail and finance advertisers. Alphabet noted that Gemini-powered improvements in query understanding allow Google to better monetize longer, more complex searches by delivering more relevant advertisements. AI-powered advertising products such as AI Max are already being widely adopted, with advertisers using these tools seeing higher conversions at similar returns on ad spend.
Alphabet is also expanding Search beyond traditional web queries into an AI-powered productivity platform. The company recently introduced integrations that allow users to connect services such as Instacart, Canva and YouTube Music directly within AI Mode, enabling actions like creating shopping carts, generating design templates and building playlists without leaving Search. These capabilities deepen user engagement while making Google’s ecosystem more valuable and difficult for competitors to replicate.
GOOGL Faces Tough Competition in the Search DomainAlphabet faces competition from Microsoft and Baidu in the Search domain.
Microsoft is strengthening its search ecosystem through Bing and Edge by embedding advanced AI capabilities across its consumer products. Microsoft is also integrating proprietary AI models into Bing, improving image generation, speech recognition and search experiences while benefiting from broader investments in Copilot, Azure AI and its multi-model strategy. These enhancements are designed to increase user engagement, improve search relevance and capture a larger share of digital advertising, creating a stronger competitive challenge for Google in AI-powered search.
Baidu is also accelerating its AI-first search strategy, particularly in China. The company has highlighted continued improvements in AI Search through enhanced planning, content generation and content-quality evaluation, enabling more intelligent and higher-quality search results while reducing low-quality content. Baidu plans to further integrate AI Search with ERNIE Assistant to improve information discovery, content understanding and task completion. The company has also reiterated that AI Search remains one of its highest-priority applications and will continue to receive investments to strengthen search accuracy and user experience.
GOOGL’s Share Price Performance, Valuation & EstimatesAlphabet shares have returned 1.5% year to date (YTD), outperforming the broader Zacks Computer and Technology sector’s return of 10.8%.
GOOGL Stock’s Price Performance
Image Source: Zacks Investment Research
GOOGL stock is trading at a premium, with a forward 12-month price/sales of 8.07X compared with the broader sector’s 6.46X. Alphabet has a Value Score of D.
GOOGL Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $14.34 per share, up 0.3% over the past 30 days, suggesting 32.65% growth from 2025’s reported figure.
Alphabet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SPCX stock is moving. See the chart and price action here. Alphabet disclosed this week that it held $94.1 billion of SpaceX shares as of June 30, marking the first time the company has valued its SpaceX stake against public market prices since the company’s June 12 IPO.
The position remains largely frozen for now. About $80 billion sits under short-term sale restrictions, while the remaining $14.1 billion stays locked up through the third quarter of 2027.
Google’s $920 Million-A-Month AI Computing DealThe arrangement grants Google access to approximately 110,000 Nvidia graphics processing units along with associated CPUs, memory and infrastructure housed in SpaceX’s data centers.
Full monthly payments run from October 2026 through June 2029, totaling roughly $30 billion over the contract term and either party can terminate the deal after Dec. 31, 2026 with 90 days’ notice.
The juxtaposition is striking on paper, but the two arrangements are structurally separate. Alphabet’s equity stake reflects a decade-old strategic investment dating to 2015, when SpaceX carried a $12 billion valuation.
The compute contract, by contrast, functions as a commercial vendor relationship tied to surging AI infrastructure demand across the industry.
Next Up: Data Centers In Orbit?The orbital approach would sidestep Earth’s power grid constraints, and Google CEO Sundar Pichai had suggested “tiny racks of machines” in satellites could become a normal way to build data centers within a decade.
If SpaceX and Google partner on orbital data centers, the two companies’ financial ties would deepen further, adding a space-based compute layer on top of Alphabet’s $94.1 billion equity stake and its existing $920 million-a-month deal for ground-based AI computing capacity.
Google’s relationship with SpaceX now spans three distinct layers: a $94.1 billion equity stake built over a decade, a $920 million-a-month contract for terrestrial AI computing capacity running through 2029 and early-stage talks over orbital data centers that could extend the partnership into space itself.
Each arrangement carries its own terms and timeline, but together they illustrate how deeply intertwined Alphabet and SpaceX have become across ownership, infrastructure and the broader AI computing race.
As SpaceX settles into life as a public company, investors will likely watch this dual investor-customer dynamic closely for signs of how far the relationship extends.
This image was generated using artificial intelligence via Gemini.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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AI is supposed to help businesses accelerate. But Google search just grew slower than the quarter before. And -- judging by the headlines about the earnings report -- almost nobody noticed.
Alphabet's (GOOG +0.65%)(GOOGL +0.94%) second-quarter report this week buried the figure under two louder storylines -- a $99 billion paper gain on its equity stakes, and another increase in capital spending plans, to a range topping out at $205 billion this year. The market reacted to the spending, sending shares down about 7% on Thursday.
But I'd argue the Search number deserves more attention than either. Google Search & other revenue, the biggest single line in Alphabet's business, grew 17% year over year to $63.3 billion. In the first quarter, it grew 19%.
And with investors increasingly asking how much of Google's core franchise AI (artificial intelligence) chatbots could eventually take, a Search slowdown is the number the bears have been waiting for. So it's worth being precise about what happened.
Image source: Getty Images.
The end of a four-quarter streak Search had been on a remarkable run of acceleration. Its year-over-year growth rate went from 10% in the first quarter of 2025 to 12% in the second quarter, 15% in the third, 17% in the fourth, and 19% in the first quarter of 2026. That's four consecutive quarters of speeding up. The second quarter's 17% snapped the streak.
To be clear, 17% is still a spectacular rate for a business generating more than $63 billion a quarter. Search's growth last quarter matched the fastest rate it posted in any quarter of 2025. This is a slowdown only in the sense that a very good number followed an even better one.
And the comparison math matters here. A year ago, Search was lapping 10% growth -- its softest quarter in the sequence. Last quarter, it was lapping 12%. Stack the two years together (17% on top of last year's 12%, versus 19% on top of 10%), and growth over the two-year period comes out to about 31% in both the first and second quarters of 2026. On that basis, Search didn't slow at all. The deceleration looks more like a tougher comparison than a change in demand.
Management's evidence points the same way.
"Our popular AI features are driving Search query growth," CEO Sundar Pichai said in Alphabet's second-quarter earnings release, adding that the Gemini app now has 950 million monthly active users. That's the opposite of what share loss to AI assistants should look like, at least so far.
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The context around the number The rest of the report makes the Search figure easier to carry. Alphabet's total revenue rose 24% year over year to $119.8 billion, the company's 12th consecutive quarter of double-digit growth. The company's cloud computing segment, Google Cloud, saw revenue accelerate to 82% growth, reaching $24.8 billion, and the segment's operating margin expanded to 35.6% from 20.7% a year earlier. YouTube ads grew 13% to $11.1 billion, and subscriptions grew 15%.
This is not a company leaning on one growth engine.
Of course, the bear case doesn't need this quarter to prove anything. The argument is about the next several years. If consumers gradually shift their questions from a search bar to AI assistants, the erosion could show up slowly, then all at once.
One decelerating quarter with a flat two-year trend isn't evidence that's happening. But the metric now has investors' attention, and the third quarter will lap a 15% comparison -- harder than last quarter's 12%. If the two-year math starts shrinking from 31%, that would be the earlier warning worth acting on.
I think the takeaway is this: the capital spending debate knocked the stock down, but the Search number is the one that decides if Alphabet's franchise is intact. This quarter, it held up better than the headline rate suggests. I'd keep owning the stock. Just watch the two-year math from here, because that's the version of this number that will be worth watching to see whether the AI worries turn out to be right.
SummaryI am upgrading Alphabet from HOLD to BUY. My skepticism on advertising dependence has not changed, but the risk profile around it has, especially following regulatory news.Q2 was operationally excellent, with 24% revenue growth, 82% cloud growth, and a $514 billion backlog.The recent DMA fine is 0.22% of global turnover. Combined with the Android case now final, a decade of European legal risk is priced and closed. The stock fell anyway.With $195 billion to $205 billion of 2026 capex converting into depreciation, EPS will fight a D&A headwind. The rerating, not the earnings, has to deliver the return.My scenarios: 18x bear at ~$248, 25x to 28x base at ~$345 to $386, and 32x to 35x bull at ~$442 to $483 against ~$318 today. The asymmetry is what makes this a BUY. Getty Images
As an AI bull, I have for a long time underestimated what role Alphabet Inc. (GOOG) (GOOGL) could play in the AI race. Google today has a fully integrated AI “supply chain”, starting with their
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Big Tech’s AI Capex Squeeze Signals Market ShiftDeconstructing this trend, Fidelity’s Director of Global Macro Jurrien Timmer highlighted that massive capital expenditures are heavily crowding out shareholder returns, driving the group’s payout ratio down to 37%. The payout ratio represents the proportion of a company’s cash flow or earnings distributed to shareholders through dividends and stock buybacks.
Timmer noted that the Mag 7 index has “only drifted sideways since October 2025,” while its relative price against the broader S&P 500 continues to diverge lower.
With cash flows redirected toward AI infrastructure instead of buybacks and dividends, Timmer asked whether the market is witnessing “the end of an era?” for mega-cap dominance.
Record Value Wiped Out as Capex AcceleratesThe market rout erased roughly $797 billion in combined market capitalization across the Magnificent 7, marking their steepest sell-off since April 2025.
Alphabet reported negative free cash flow for the first time as a public company due to massive AI infrastructure costs, joined by broader macro headwinds including rising oil prices and Treasury yields.
Concurrently, Brent Schutte of Northwestern Mutual Wealth Management advised investors to pivot toward companies with actual earnings rather than paying for valuations dependent upon outcomes that “may or may not actually happen.”
Growing Case for Equal-Weight StrategiesAs capital expenditures accelerate, investment managers warn that historical leadership from mega-caps is fading.
Astoria Advisors noted that “rich valuations are the case for the Mag 7,” observing that as these firms ramp up spending, returns have been “flat to slightly down.”
Stressing that “diversification still matters,” Astoria recommends reallocating capital into equal-weight strategies and financial sectors to manage risk appropriately.
How Has MAGS Performed In 2026?MAGS ETF declined by 4.63% year-to-date, up 0.14% over the last month, and higher by 9.74% over the year. It closed 4.63% lower at $63.23 apiece on Thursday, and it was up 0.94% in premarket trading on Friday.
Benzinga’s Edge Stock Rankings indicate that MAGS maintains a weak price trend in the long, short, and medium terms, with a moderate momentum score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Tada Images / Shutterstock
Market News and Data brought to you by Benzinga APIs
Analyst’s Disclosure: I/we have a beneficial long position in the shares of GOOG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Goldman Sachs ukazuje své předpovědi cen ropy a vývoj zdanění korporátních zisků. Alphabet podle Yahoo Finance přináší jedinečnou kombinaci růstu a ziskovosti cloudových služeb. Na Fox News si jako hosta pozvali ředitele společnosti DoubleLine Jeffreyho Gundlacha, podle kterého nyní probíhá v určitém smyslu podobná finanční alchymie jako před rokem 2008 a který čeká, že Fed pod novém šéfem výrazně změní své chování.
Ceny ropy k 80 dolarům za barel: Goldman Sachs v nových předpovědích očekává, že ceny ropy budou do konce roku 2027 klesat k 80 dolarům za akcii. V případě pokračujícího uzavření Hormuzského průlivu by platilo to samé, ovšem s tím, že do začátku roku 2027 by ceny vstupovaly na úrovních nad 120 dolary za barel. Scénář „vyšší těžba, nižší poptávka“ by je naopak poslal do postupného poklesu pod 60 dolarů za barel:
Zdroj: X
Ve druhém grafu vidíme vývoj efektivních sazeb ze zisků ve vybraných zemích. Nyní jsou nejnižší ve Spojených státech, nejvyšší v Německu. Zde byly přitom před 45 lety efektivní sazby u 65 %:
Zdroj: X
Opět pochybná kvalita aktiv? Na Fox News si jako hosta pozvali ředitele společnosti DoubleLine Jeffreyho Gundlacha, který se podle stanice stále více snaží varovat před některými finančními a investičními riziky. Gundlach pak hovořil o tom, že před krizí roku 2008 docházelo k „finančních alchymii“, kdy finanční instituce tvořily deriváty z málo kvalitních hypoték s tím, že tyto nově vytvořené cenné papíry měly mít nízké riziko. Významnou roli v tom hrály hlavní ratingové agentury, které těmto derivátům dávaly investiční rating. Podle experta nyní probíhá něco podobného v oblasti tzv. private credit. Tedy u půjček poskytovaných mimo veřejné trhy.
Gundlach si myslí, že i zde je ve hře „pochybný rating“, některé společnosti přitom už přiznávají nižší kvalitu poskytnutých půjček. Investor k tomu dodal, že při předpovědi dalšího vývoje je dobré vnímat, „jaká je motivace.“ Tedy konkrétně to, že private credit společnosti podle něj chtějí na klesající kvalitu aktiv reagovat co nejpomaleji tak, aby si udržely klienty a výši poplatků. K tomu Gundlach dodal, že problémy nastávají v situacích, kdy „hodně lidí rychle bohatne“. Všichni pak chtějí, aby taková situace trvala dlouho. A v oblasti finančního systému nazývaného „private markets“ nyní vládne „divoký Západ“. Zdůrazňuje se tam například to, že aktiva vykazují nižší volatility. Podle investora je to ale jen mýtus, protože jde pouze o zdánlivě nízkou volatilitu způsobenou tím, že aktiva se neobchodují.
„Naděje je špatná investiční strategie,“ řekl také Gundlach v souvislosti se současným děním a za příklad uvedl softwarové odvětví: „Všichni tam doufají, že to nebude tak špatné, kupují si čas.“ Pod toho investor přešel přímo k americké centrální bance, protože její nový šéf Kevin Warsh si podle něj také „jen kupuje čas“. „Nezazlívám mu to, je tam nový, ale má analytické týmy,“ dodal Gundlach, kterému se podle jeho slov nelíbí ani způsob rozhodování Fedu, který omezuje rychlost rozhodování.
Gundlach v souvislosti s monetární politikou zmínil i analýzu, podle které Fed většinou uvolňuje svou politiku v době, kdy ISM indexy ukazují na nízkou inflaci a zaměstnanost. Naopak k utahování politiky dochází tehdy, když ceny rostou rychleji a zaměstnanost je výš. Výjimkami, které nesedí na tento vzorec, jsou dvě období, první, když v čele seděl Arthur Burns a druhé, když jej vystřídal Paul Volcker. Tato logika pak podle Gundlacha také ukazuje, že Fed by měl nyní „utahovat a o uvolnění ani nepřemýšlet“.
Od dob Bena Bernankeho podle investora funguje jednoduché pravidlo, kdy se sazby americké centrální banky hýbou tam, kam ukazují výnosy dvouletých vládních dluhopisů. „Nemělo vůbec cenu sledovat, co Fed říká, stačilo sledovat dvouleté dluhopisy.“ Nynější předseda Fedu Warsh bude ale podle experta postupovat jinak, a to je dobře. „Podobně postupoval Volcker. V době, kdy byly výnosy dvouletých vládních dluhopisů u 15 %, zvedl sazby na 20 %, aby bojoval s inflací.“ Jinak řečeno, Volcker a jeho monetární politika byli těmi, kdo vede a dvouleté sazby šly za nimi, ne naopak. Gundlach je tak podle svých slov optimistický, protože Warsh „nebude jen automatem“ a bude „lepším šéfem Fedu než Powell“.
Gundlach následně odpovídal na dotaz týkající se nekalé konkurence ze strany Číny. K tomu řekl, že s ní rozhodně nesouhlasí. V této souvislosti přidal příběh, kdy jeho strýc stál za vynálezem kopírek Xeroxu. Pak ale musel „doslova letět do Japonska a tam se účastnit soudu, protože v Japonsku začali vyrábět ten samý přístroj, jen v jedné součástce vyměnili kov za plast. To samé dělají nyní Číňané a není divu, mnoho jich studuje tady ve Spojených státech. Pak se vrátí a přináší znalosti do čínských firem.“
Vzácná kombinace od Googlu: Yahoo Finance se detailněji věnuje výsledkům společnosti Google, respektive jejímu cloudu. „Google Cloud přinesl jednu z nejvzácnějších kombinací v oblasti velkých technologických firem: Rychlejší růst a zároveň vyšší ziskovost.“ Konkrétně to znamená, že tržby se v posledním čtvrtletí zvýšily o téměř 82 %, zatímco provozní marže se dostala na téměř 36 %.“ Alphabet k tomu dodal, že zisky generují výpočetní kapacity, které si firmy pronajímají k vývoji umělé inteligence, souvisejícího softwaru a tradičních cloudových služeb, jako jsou databáze, úložiště a kybernetická bezpečnost.
Yahoo dodává, že „tyto výsledky pomáhají vysvětlit, proč Alphabet nadále utrácí… Kapitálové výdaje se zdvojnásobily na téměř 45 miliard dolarů, což stlačilo čtvrtletní volný tok hotovosti pod nulu… Zbytek velkých technologických firem nyní musí ukázat, že jeho rekordní investice mohou vést ke stejné vzácné kombinaci. Tedy k rychlejšímu růstu a vyšším ziskům.“
Japan’s Nikkei fell sharply on Friday as Alphabet’s spending plans revived doubts over how quickly the artificial-intelligence boom will translate into cash returns for the companies funding it.
The Nikkei 225 dropped 2.69% to 64,634.04 in early trading, while the broader Topix lost 1.28% to 4,002.09.
The gap reflected concentrated selling in the technology heavyweights that dominate the Nikkei.
The benchmark has now fallen more than 7% in July after entering correction territory last week, leaving investors increasingly sensitive to signals from US chip and platform companies.
Alphabet shares sank about 7% in New York even after Google Cloud revenue surged 82% to $24.8 billion.
Investors instead focused on second-quarter capital expenditure of $44.9 billion and negative free cash flow of $5.9 billion, both driven by the rapid expansion of AI infrastructure.
The Google parent also raised its 2026 capital-spending forecast to between $195 billion and $205 billion from $180 billion to $190 billion.
Management said spending would remain elevated as customer demand continued to exceed available computing capacity.
The market reaction showed that growth alone is no longer enough.
Investors increasingly want evidence that higher data-centre and server spending can produce durable cash returns, rather than only faster revenue and cloud bookings.
That concern also dragged the Nasdaq more than 2% lower overnight.
The sell-off hit the companies most closely tied to the AI hardware cycle.
Advantest dropped 6.33%, Tokyo Electron lost 5.43% and memory producer Kioxia declined 4.4%. SoftBank Group slid 7.42%, making it one of the largest drags on the Nikkei.
IwaiCosmo strategist Kazuaki Shimada said the retreat was being driven mainly by overseas technology signals rather than a deterioration in Japan’s domestic economy.
Japanese corporate earnings could help change the direction of the market if companies deliver strong guidance.
The Nikkei’s price-weighted construction also magnifies movements in high-priced technology shares, helping explain why it fell more than twice as much as the capitalisation-weighted Topix.
The session was not a broad market capitulation.
Central Japan Railway rose 1.17% and East Japan Railway gained 0.6%, while Kawasaki Kisen and Mitsui OSK Lines also advanced. Otsuka Holdings climbed 1.6% to lead Nikkei gainers.
Those moves point to a rotation towards businesses with domestic revenues, steadier cash flows and less exposure to AI valuations.
Strong Japanese earnings could help separate local fundamentals from the global technology unwind. Another weak round of US chip results, however, would leave the Nikkei vulnerable to further selling.
Alphabet (GOOG -6.88%)(GOOGL -7.12%) gave investors plenty to debate in its second-quarter report this week, from 24% revenue growth to another big increase in its capital spending plans. But I'd argue the most remarkable number sat in the company's quarterly filing with the Securities and Exchange Commission. Alphabet's stake in rocket maker SpaceX (SPCX +2.58%) was worth about $94 billion as of June 30.
Zoom out, and the history behind that figure is extraordinary. In January 2015, Google and investment firm Fidelity together put $1 billion into SpaceX for a combined stake of just under 10%. SpaceX now carries a $1.5 trillion market value -- about 150 times what the entire company was worth in that funding round.
But Alphabet can't spend a dollar of its windfall yet. The filing shows the whole position is restricted from sale. About $80 billion of the stake sits under short-term restrictions (the standard lockup period that follows an initial public offering), and the remaining $14.1 billion is locked up through the third quarter of 2027.
Here's a closer look at what the stake means for shareholders on both sides of it.
Image source: Getty Images.
A windfall on paper The stake did wonders for Alphabet's reported profit. Second-quarter net income rose 298% year over year to $112.1 billion, and earnings per share climbed 294% to $9.11.
The driver wasn't advertising or cloud computing. It was a $99.0 billion gain on equity securities, which the company said primarily reflected unrealized gains from SpaceX and a private company (reported to be artificial intelligence (AI) developer Anthropic).
Unrealized is the key word. Alphabet didn't collect $99 billion in cash. It marked up shares it isn't currently allowed to sell.
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That distinction helps explain why investors mostly shrugged at the windfall and focused on spending instead. Alongside the report, Alphabet raised its capital spending guidance for 2026 to $195 billion to $205 billion, from the $180 billion to $190 billion range it set in April. Free cash flow swung to negative $5.9 billion for the quarter, down from a positive $10.1 billion in the first quarter. Also worth noting: the company raised $49.6 billion in June by selling new stock, all while sitting on $94 billion of SpaceX shares it can't touch. After all, locked-up paper gains don't fund data centers.
Shares of Alphabet were down about 7% Thursday afternoon as of this writing.
Of course, the stake still matters. It amounts to about 2.4% of Alphabet's roughly $3.9 trillion market capitalization -- a nice bonus for shareholders, but not the reason to own the stock.
The other side of the trade For SpaceX shareholders, the disclosure sends two messages at once.
The first is a vote of confidence. Alphabet has held on for more than a decade, and it still owns an effective stake of about 4.9% of the company, down from about 6% before recent dilution. An investor of Alphabet's caliber keeping a position this large is arguably part of the bull case.
The second message is about supply. SpaceX stock has had a rough public debut. Shares went public at $135 in June, peaked at $225.64, and trade at about $116 as of this writing -- a decline of nearly 49% from the high.
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And the restrictions on Alphabet's stake begin easing after SpaceX delivers its first earnings report, scheduled for Aug. 4. Alphabet hasn't said anything about selling. But an outside holder with $94 billion of stock and a spending plan of its own approaching $200 billion at least has reasons to consider it once it's allowed.
Also, SpaceX shares have fallen since June 30, so the stake is already worth less than the filing's mark. Paper gains move in both directions.
So what should investors do with the news? For Alphabet shareholders, I'd treat the SpaceX windfall as exactly that -- a windfall. The investment case still rests on the operating business (where revenue grew 24% year over year last quarter and Google Cloud is accelerating) and on whether the company's enormous AI spending pays off.
For anyone eyeing SpaceX stock, though, the filing is worth remembering. The company is still losing money, its market value sits near $1.5 trillion, and one outside holder alone is sitting on $94 billion of stock it will soon be free to sell. Between the two stocks, I'd rather own the shareholder than the rocket maker.
David Wagner explains why Alphabet (GOOGL) is emerging as an AI leader through stronger cloud growth, despite recent stock weakness brought by investor fears of ramping CapEx. He also breaks down Tesla's (TSLA) earnings miss and its long-term AI strategy after the company posted negative cash flow.
BENSALEM, Pa.--(BUSINESS WIRE)--Law Offices of Howard G. Smith continues its investigation on behalf of Alphabet Inc. (“Alphabet” or the “Company”) (NASDAQ: GOOG) investors concerning the Company's possible violations of federal securities laws.IF YOU ARE AN INVESTOR WHO SUFFERED A LOSS IN ALPHABET INC. (GOOG), CONTACT THE LAW OFFICES OF HOWARD G. SMITH ABOUT POTENTIALLY PURSUING CLAIMS TO RECOVER YOUR LOSS.Contact the Law Offices of Howard G. Smith to discuss your legal rights by email at howar.
Alphabet Inc. raised its capital spending forecast to a range of $195 billion to $205 billion this year, up from a previous forecast of $190 billion. The company's quarterly cash flow was negative for the first time since going public, with negative free cash flow of $5.9 billion in the period, and its cloud revenue totaled $24.77 billion, up 82% from a year earlier.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of GOOG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
LOS ANGELES--(BUSINESS WIRE)--The Law Offices of Frank R. Cruz continues its investigation of Alphabet Inc. (“Alphabet” or the “Company”) (NASDAQ: GOOG) on behalf of investors concerning the Company's possible violations of federal securities laws.IF YOU ARE AN INVESTOR WHO LOST MONEY ON ALPHABET INC. (GOOG), CLICK HERE TO INQUIRE ABOUT POTENTIALLY PURSUING A CLAIM TO RECOVER YOUR LOSS.What Is The Investigation About?On July 16, 2026, Bloomberg news reported that Alphabet's Google is “months beh.
Wall Street focused on one number: an additional $15 billion in planned capital expenditures for 2026, pushing expected AI infrastructure spending to as much as $205 billion.
The move raised fresh concerns that the AI arms race is consuming cash faster than it can generate returns.
But while investors rushed for the exits, Bank of America Securities analyst Justin Post argued the selloff may have missed the bigger story.
The analyst reiterated his Buy rating and $430 price objective, implying a nearly 30% upside from where the stock traded on Thursday.
Post indicated that Alphabet’s latest results offered evidence that its AI investments are already generating measurable returns rather than simply inflating costs.
According to Post, there are four reasons why investors should look beyond the capex shock.
1. Cloud Growth Is Accelerating Faster Than Anyone ExpectedThe clearest proof, according to Post, came from Google Cloud.
Cloud revenue surged 82% year over year, far above Wall Street expectations of roughly 65%, while operating margins expanded to 35.6%.
“Cloud acceleration, margin strength and backlog growth suggest capex is driving immediate returns,” Post said.
For investors, that changes the debate. Higher spending becomes easier to justify when new capacity immediately translates into faster revenue growth.
2. The Backlog More Than Covers The Extra SpendingAlphabet increased its 2026 capital spending guidance by roughly $15 billion.
Yet Post argues the demand pipeline is growing much faster.
The company exited the quarter with a record $514 billion cloud backlog after adding roughly $50 billion in just one quarter. Management also disclosed that customers are consuming more than 50% above their contractual commitments while Google is winning new cloud customers at more than twice last year’s pace.
“More capacity = more sales,” he added.
3. AI Hasn’t Broken SearchOne of Wall Street’s biggest fears entering earnings was that AI chatbots would begin cannibalizing Google’s search business.
Post says the opposite continues to happen.
“Google Search remains a net AI beneficiary, despite robust AI engagement growth on other platforms.”
The analyst believes improving AI models, new advertising formats, better commercial intent detection and eventual monetization of the Gemini application could create another leg of Search growth over time.
4. The Stock Isn’t Expensive Relative To Its GrowthDespite concerns over free cash flow, Post argues valuation has become increasingly attractive.
Following Thursday’s selloff, Alphabet traded at roughly 22 times BofA Securities’ 2027 earnings estimate — close to its long-term historical average even as the firm expects revenue growth to accelerate well above the pace seen during 2023–2025.
The analyst also notes that, after stripping out businesses such as Cloud, YouTube and Waymo, Alphabet’s core advertising and Google Play operations are effectively valued at about 13 times earnings — a discount to the broader S&P 500.
What Are Analysts Saying Now?According to Benzinga Analyst Ratings, the consensus on Alphabet is a Buy with an average price target of $421.06. That implies roughly 32% upside from Thursday’s level, with individual targets running from a low of $350 to a Street-high $515.
The flow of updates on Thursday was unusually split, with roughly a dozen firms moving targets in both directions on the same set of numbers.
Piper Sandler cut its target by $50 while BMO Capital raised its own by $10. DA Davidson took the Street low down to $350.
BofA Securities sits in between, holding $430 but trimming its target multiple to 27 times 2027 earnings from 28 times, a nod to the sector-wide anxiety about spending.
That leaves investors with two readings of the same quarter.
One says Alphabet is buying growth it cannot fund from cash flow. The other says the growth is already contracted and sitting in a $514 billion backlog.
The market is pricing the bill.
Market News and Data brought to you by Benzinga APIs
Alphabet (GOOGL -7.12%), a search, ads, video, cloud, and AI infrastructure platforms provider, closed at $317.69, down 7.13%. Investors are reacting to higher AI-related spending and watching whether cloud growth can support returns on that build-out. Trading volume reached 68.6M shares, coming in about 111% above its three-month average of 32.5M shares. Alphabet IPO'd in 2004 and has grown 12,557% since going public.
How the markets moved todayThe S&P 500 (^GSPC -1.21%) fell 1.20% to 7,409, while the Nasdaq Composite (^IXIC -2.15%) dropped 2.15% to 25,138. Among internet content and information, digital advertising, and cloud services rivals, Microsoft closed at $381.58, down 2.24%, and Meta Platforms finished at $606.10, down 3.36%.
What this means for investorsOn the surface, it was a great-looking quarter for Alphabet as:
sales rose 24%search revenue increased 17%Google Cloud sales spiked 82%Gemini reached 950 million monthly active userstokens per minute rose from 16 billion to 22 billionYouTube advertising sales grew by 13%income from operations jumped 30%However, the market seemed to focus solely on management’s guidance that capex would land between $195 billion and $205 billion in 2026 -- and would “increase significantly” in 2027 -- which sparked today’s sell-off. Capex rose by 100% in Q2 to $45 billion and caused free cash flow to turn negative for the first time in Alphabet’s publicly traded history.
While this isn’t inherently bad, the company needs to show it can deliver strong ROI from these massive capex outlays, or else all this heavy spending could weigh on the stock’s price. Personally, I think it’s far too early to judge whether these investments will pay off, as they may take years to develop into anything that generates profit. Still, I understand the market’s cautious stance given the immense scale of the spending. For now, Alphabet remains my favorite AI stock with its array of interconnected offerings and robust growth optionality, even if AI eventually becomes commoditized over the uber-long term.
Josh Kohn-Lindquist has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.
Google’s contracted future spending commitments increased by nearly $500 billion in three months and reached $811 billion at the end of June, Bloomberg reported Thursday (July 23).
The company disclosed these obligations in a quarterly filing, separately from parent company Alphabet’s capital expenditure budget, according to the report.
Alphabet said Wednesday (July 22) that it expects its capital expenditures to total between $195 billion and $205 billion this year, the report said.
The $811 billion in commitments include purchases the company has committed to making under supply agreements and open purchase orders. They include chips, data centers, electricity, inventory, content licenses and other resources, per the report.
The report attributed the leap in commitments to Alphabet securing resources for its AI infrastructure.
PYMNTS reported Wednesday that during Alphabet’s second-quarter earnings call, the company announced that it raised its 2026 capital spending forecast from the previous $180 billion to $190 billion to the new forecast of $195 billion to $205 billion.
Management said during the call that the increase reflects faster deployment of computing capacity, while third-party capacity will temporarily supplement Google’s infrastructure.
Asked about returns on additional computing investment in 2027, Alphabet CEO Sundar Pichai pointed to long-term customer agreements, renewals and continuing demand.
“We are seeing strong demand indicators, including long-term deals,” Pichai said. “If anything, the dynamics look healthier than where we were about a year ago, and so that’s what gives us the confident to undertake those investments.”
Reuters reported Thursday that Alphabet’s soaring AI spending resulted in the company’s first cash burn on record, as it burned $5.9 billion in the second quarter.
The report added that the company’s cloud unit, which rents out AI computing power, delivered record growth of 82%.
Following Alphabet’s disclosure, investors will be watching next week’s earnings reports from Microsoft, Meta and Amazon to see how the AI-related payoffs compare to the outlays, the report said.
It was reported July 10 that the five companies spending the most on AI data centers in the United States doubled their debt load over the past five years to finance their efforts. In total, Alphabet, Amazon, Meta, Microsoft and Oracle added about $350 billion to their debt obligations.
Index Dow Jones -0,97 % na 51711,65 b. S&P 500 -1,21 % na 7408,3 b. Nasdaq Composite -2,15 % na 25137,69 b.
Obchodní den končí v USA v červeném. Široký index S&P 500 odepisuje 1,2 % pod tlakem poklesů v sektoru komunikačních služeb a zbytné spotřeby. V komunikační službách se negativní sentiment propsal do akcií Alphabet, které po kvartálních výsledcích odepisují 6,89 %. Rudá barva se prolila i do telekomunikačních služeb, kde reportoval T-Mobile US (- 10,75 %). Ten se chce v následujícím kvartálu zaměřit na vyšší výnosy z každého zákazníka a méně řešit přírůstky nových klientů. Vedení očekává slabší přírůstky a společnost se snaží převádět zákazníky na dražší tarify, což by mohlo vést k dočasnému úbytku zákazníků. Za minulý kvartál firma meziročně zvýšila čistý zisk o 5 % a díky silnému cash flow byl zvýšen celoroční výhled na USD 18,4 -18,8 mld. Zveřejněný zisk na akcii USD 2,99 překonal odhady trhu.
Nedařilo se ani aerolinkám. American Airlines Group (- 8,35 %) klesá kvůli slabšímu výhledu. Společnosti v uplynulém kvartálu významně rostla cena leteckého paliva. I když se zvýšené náklady povedlo částečně přesunout na zákazníka, tak trh negativně reaguje na zvýšený tlak na marže do budoucna. Management očekává v dalším kvartálu ztrátu až do výše USD 0,1 na akcii. V reportu za minulý kvartál dosáhl zisk na akcii na USD 0,15.
Kladně končí sektor průmyslu. GE Vernova posílila o 4,69 % a o 10,54 % posílil Lockheed Martin.
Z indexu Dow Jones posílila třetina titulů na čele s Honeywell Technologies (5,7 %).
Komoditní trhy se soustředí na černé zlato. Futures na ropu Brent se nyní obchodují těsně pod hranicí USD 100 a WTI při růstu o 5,3 % překonává cenovku USD 91,5.
Index S&P 500 -1,21 % na 7408,3 b. Nejsilnější sektory S&P Změna Nejslabší sektory S&P Změna Průmysl +1,8 % Komunikační služby -5,2 % Zdravotní péče +1,3 % Zbytná spotřeba -5,1 % Energie +0,6 % Nezbytná spotřeba -1,1 % Nejsilnější akcie S&P Změna Nejslabší akcie S&P Změna Lockheed Martin Corp (LMT) +11 % Tesla (TSLA) -15 % Allegion (ALLE) +10 % T-Mobile US (TMUS) -11 % United Rentals (URI) +10 % Rollins (ROL) -9,3 % Thermo Fisher Scientific (TMO) +8,7 % Dover Corp (DOV) -7,8 % Quest Diagnostics (DGX) +8,6 % Alphabet (GOOGL) -7,1 %
Marek Kameništiak
Fio banka, a.s.
Prohlášení
Alphabet (GOOGL) declared a quarterly dividend of $0.22 per share, keeping its payout unchanged for the second consecutive quarter.The dividend will be paid on
Alphabet (GOOG -6.73%) (GOOGL -6.80%) stock tumbled 7.4% through 11:20 a.m. ET Thursday despite absolutely steamrolling analyst forecasts for Q2 earnings. Expected to earn just $2.88 per share on $116.5 billion in sales, Alphabet reported profits of $9.11, and sales of $119.8 billion -- both well ahead of expectations.
So why is Alphabet stock crashing in response?
Image source: Google.
Alphabet Q2 earnings Revenue ran ahead 24% year over year , led by Google Cloud growth of 84%. Google Services revenues were up only 15%, however, with Google Search up 17%, and YouTube Ads up 13%. Earnings roughly tripled year over year.
CEO Sundar Pichai credited "AI infrastructure and AI solutions" in the company's Cloud business for the performance. It's no surprise, therefore, that Alphabet plans to double down on what's working, and management says it will increase capital investment in AI to somewhere between $195 billion and $205 billion this year (about $15 billion beyond previous predictions) -- and then spend even more hiring AI computing capacity from third parties.
And that didn't please investors one bit.
Today's Change
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What it means for Alphabet stock Alphabet's tremendous cash outlays for AI may be delivering the revenue and GAAP profit growth investors like to see, but they're devastating the company's cash flow statement, which showed $5.8 billion in cash burn in Q2 -- versus $5.3 billion in positive FCF a year ago.
The "good" news is that if Alphabet invests "only" $205 billion in building out its AI business this year, then forecasts for $210 billion in cash from operations will return the company to about $5 billion in positive FCF by the end of the year.
The bad news: GAAP profit is expected to be $225 billion this year. And almost none of that will be backed up by real free cash flow.
Caveat investor.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
Key Takeaways Alphabet's Q2 revenues rose 24%, while earnings surged on unrealized equity securities gains.Google Cloud revenues jumped 82%, with backlog reaching $514 billion and margins expanding sharply.Alphabet raised 2026 capital spending guidance to $195 billion-$205 billion to meet AI and Cloud demand. Alphabet (GOOGL - Free Report) reported second-quarter 2026 earnings of $9.11 per share, comfortably beating the Zacks Consensus Estimate of $2.88 per share and significantly higher than $2.31 per share reported in the year-ago quarter. The sharp increase primarily reflected unrealized gains in the company’s equity securities portfolio.
Consolidated revenues jumped 24% year over year to $119.80 billion. Net revenues, excluding traffic acquisition costs, increased 26.8% year over year to $103.62 billion, surpassing the Zacks Consensus Estimate by 2.31%. Google Cloud’s 82% year-over-year growth and $514 billion backlog were key highlights in the reported quarter.
GOOGL’s Services Benefit From Search GrowthGoogle Services revenues increased 15% year over year to $94.54 billion. Segment operating income rose 20% to $39.54 billion, while the operating margin expanded to 41.8% from 40.1% reported in the year-ago quarter.
Google Search & other revenues climbed 17% year over year to $63.27 billion, with retail and finance making the largest contributions. Alphabet stated that AI-powered Search experiences continued to drive query growth. AI Mode surpassed one billion monthly active users after its global expansion.
YouTube advertising revenues advanced 13% to $11.06 billion, supported by direct-response and brand advertising. More than 1.7 billion unique viewers watched World Cup-related videos on YouTube, providing an additional boost to advertising demand.
Alphabet’s Cloud Business Accelerates SharplyGoogle Cloud revenues hit $24.77 billion. The strong year-over-year growth was driven by Google Cloud Platform, enterprise AI solutions, AI infrastructure and core services. The company also began recognizing revenues from TPU system sales to customer data centers.
Cloud operating income more than tripled to $8.81 billion from $2.83 billion reported in the year-ago quarter. The segment’s operating margin expanded to 35.6% from 20.7%, reflecting strong revenue growth and improved operating leverage.
Cloud backlog reached $514 billion, increasing by more than $50 billion sequentially. Alphabet expects to recognize slightly more than half of this backlog as revenues over the next 24 months. Nearly 90% of Fortune 100 companies now use Gemini Enterprise.
Alphabet’s AI Adoption Supports Core BusinessesGemini model APIs processed roughly 22 billion tokens per minute, up from more than 16 billion in the previous quarter. More than 9 million developers used Alphabet’s models each month, while nearly 500 Cloud customers processed more than one trillion tokens each over the past year.
The Gemini app reached 950 million monthly active users, with daily active users tripling year over year. Alphabet also reported strong adoption of Gemini-powered advertising tools, including AI Max and Performance Max.
Advertisers using these AI-powered campaigns generated an average of 15% more conversions or conversion value on Search at a similar return on advertising spending. Management remained encouraged by monetization on queries featuring AI Overviews and continued testing new ad formats within AI Mode.
GOOGL’s Operating Margin Expands Despite Rising CostsAlphabet’s operating income increased 30.4% year over year to $40.77 billion. The consolidated operating margin expanded 160 basis points to 34%, as revenue growth exceeded the increase in total costs and expenses.
Total costs and expenses rose 21% year over year to $79.03 billion. Research and development expenses increased 32% year over year to $18.22 billion, driven by AI-related hiring, compensation and depreciation. Sales and marketing expenses grew 18% year over year to $8.40 billion, while general and administrative expenses advanced 24% to $6.46 billion.
Other income totaled $97.98 billion compared with $2.66 billion a year earlier. The increase mainly reflected unrealized gains on equity securities and was the primary factor behind the outsized increase in net income and earnings per share.
GOOGL’s Cash Flow Faces Heavy Infrastructure SpendingAlphabet ended the second quarter of 2026 with $242.47 billion in cash, cash equivalents and marketable securities, while long-term debt stood at $98.17 billion.
Operating cash flow totaled $39.07 billion, up from $27.75 billion in the year-ago quarter. Capital expenditures doubled to $44.92 billion, with most spending directed toward servers, data centers and networking infrastructure for AI.
The elevated investment resulted in negative free cash flow of $5.86 billion. Trailing 12-month free cash flow was $53.27 billion.
Alphabet Raises Its 2026 Capital Spending ViewAlphabet raised its 2026 capital expenditure guidance to $195-$205 billion from $180-$190 billion. The increase reflects accelerated capacity deployment to meet demand for AI infrastructure and Cloud services.
Management expects capital expenditures to increase significantly again in 2027. Higher depreciation, data-center operating costs and energy expenses are expected to pressure profitability, while third-party capacity usage could create modest near-term pressure on Cloud margins.
Zacks Rank & Upcoming Earnings to WatchAlphabet currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector that are set to report their quarterly results are Amphenol (APH - Free Report) , Bandwidth (BAND - Free Report) and Fortinet (FTNT - Free Report) . Amphenol, Bandwidth and Fortinet sport a Zacks Rank #1 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Amphenol, Bandwidth and Fortinet are set to report their second-quarter 2026 results on July 29. Year to date, shares of Amphenol, Bandwidth and Fortinet have returned 16.6%, 316.7% and 95.3%, respectively.
Image credit: Financial Times (Data: S&P Capital IQ, Bloomberg)
Consequently, in Q2 2026, GOOGL’s CapEx reached a record $44.9 billion, while growth to $50.4 billion is projected for the following quarter. At the same time, in one year, quarterly CapEx will reach $65.2 billion, whereas FCF will be -$1.2 billion.
Image credit: Author
Also, it’s worth noting that the company’s total debt increased from $90.5 billion to $112.7 billion. But this rise in debt is offset by an increase in cash reserves from $126.8 billion to $242.4 billion. However, this can hardly be called a positive development, since the increase in cash reserves was achieved by diluting shareholders’ equity. It is a significant shift for a company that frequently engages in share buybacks.
Image credit: Author
According to GOOGL’s CEO, though, no further stock offerings are expected. The next round of investments will be financed through operating cash flow, reserves, and debt. A big chunk of the investments is aimed at meeting the strong growth in demand for Google Cloud, which saw its order backlog increase from $460 billion to $514 billion.
Risks exist, but they will not alter the trajectory of development
The current upward revision to the CapEx forecast, though, is less a result of the need to scale the company’s AI infrastructure and more a result of rising prices for the equipment and components used to build the data centers themselves. The manufacturers of GPUs, TPUs, DRAM, optical and copper interconnects, as well as other components, are the beneficiaries of Alphabet’s latest report.
This means, for GOOGL, a definite increase in the cost of services and higher CapEx to expand the necessary AI infrastructure. Because of this, the company’s operating margin rose to 34%, even though many had predicted it would reach 40%. So, the temporary decline in business margins is not a hypothetical risk, it’s a real one.
Image credit: Author
Conclusion
Hence, key takeaways for investors include not only maintaining the “Buy” rating on GOOGL shares but also the emergence of a strong signal for the semiconductor and AI infrastructure markets. The shortage of components is driving up their prices, increasing margins for manufacturers. Therefore, a large portion of my portfolio consists of the aforementioned companies and other firms benefiting from the AI supercycle.
Analyst’s Disclosure: I have a beneficial long position in the shares of GOOGL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
Market News and Data brought to you by Benzinga APIs
Shares of Alphabet and Tesla took a beating Thursday after the tech giants said they would ramp up their already breakneck pace of artificial intelligence spending – rattling investors who are increasingly wary of whether the massive bets will pay off.
Tesla shares fell 10% and Alphabet sank over 5%. The dismal trading day comes after Alphabet shares already closed 1.5% lower on Wednesday and Tesla closed down 1.3%.
Both companies warned of massive run-ups in spending: Alphabet raised its capital expenditure forecast for this year to $195 billion to $205 billion and said those figures could balloon even higher next year. The Google parent company previously projected capex between $180 billion and $190 billion.
Tesla CEO Elon Musk has ramped up AI spending ambitions. Getty Images Tesla said its capex surged 142% in the second quarter to $5.79 billion from the prior yearly period. The company said it anticipates more than $25 billion in capex this year.
At the same time investors have grown anxious about seemingly limitless AI spending, some companies have been hammered for not doing enough. Last week, for instance, IBM’s stock suffered its worst trading day since 1968 after the company admitted it had “faltered” in its AI strategy.
IBM CEO Arvind Krishna said the company “did not anticipate the magnitude of the capex reprioritization” that was happening across the tech industry.
Top brass at both Tesla and Alphabet rushed to calm investor jitters about their nosebleed figures.
“This is a massive capex year. I’m confident that all the things that we’re investing in will yield incredible returns. Really, maybe the best capex returns that we’ve ever seen,” Tesla CEO Elon Musk said on the earnings call on Wednesday, referring to capital expenditures, or spending.
Alphabet CEO Sundar Pichai has stressed his company lacks the computing capacity to meet AI demand. REUTERS Musk – who’s greatly skilled at getting investors optimistic about his lofty spending ambitions on moonshot projects – touted Tesla’s future initiatives like its Optimus humanoid robot and semiconductor production efforts. Tesla is “installing the first-generation lines for Optimus,” and will “start production soon,” the company said in its earnings presentation.
Alphabet’s CEO Sundar Pichai meanwhile said his company’s spending increase “is primarily due to an acceleration in the delivery of capacity to meet growing demand.” The tech titan has stressed that it lacks the computing capacity to meet the AI demand that it is seeing.
“Investors appear to be focusing on the sharp rise in capital expenditure, alongside a weaker margin outlook, while continued delays to Gemini 3.5 Pro and a lack of standout product releases have raised questions about whether Alphabet’s AI investments are yet translating into a clear competitive advantage,” Ben Barringer, head of technology research at Quilter Cheviot, told CNBC.
The companies’ earnings did have some bright spots. Both companies logged negative free cash flow for the second quarter. Some of Google’s investments have shown signs of paying off with its cloud revenue jumping 82% to $24.8 billion, beating forecasts.
Tesla’s core automotive business logged $20.52 billion in revenue, up 23% year-on-year. REUTERS “This is one of the strongest revenue growth quarters that Alphabet has had in five years, and Alphabet is a really great barometer for this whole AI wave,” Alison Porter, portfolio manager at Janus Henderson, told CNBC’s “Squawk Box Europe” on Thursday.
“We think this look is … very encouraging for overall AI capex and also for the returns that these platforms are seeing on that spend,” Porter said.
Tesla’s automotive business logged $20.52 billion in revenue, up 23% year-on-year.
@ProsperTradingAcademy's Charles Moon talks all about tech for his Big 3 picks Thursday. He sees opportunity in Alphabet (GOOGL) as the stock sells off after earnings, compares SK Hynix's (SKHY) setup to the Mag 7 giant's earnings reaction, and sees IREN (IREN) as a high-risk, high-reward opportunity.
Two of the market’s most-watched companies reported blowout quarters on the same night, and both sold off anyway.
Tesla (NASDAQ:TSLA | TSLA Price Prediction) beat revenue by 7.10% yet missed EPS by 38.51%, while Alphabet (NASDAQ:GOOG) crushed EPS by 199.41%. Both stocks fell. Our 24/7 Wall St. price target says both selloffs are opportunities, but for very different reasons.
The Verdict: Two Blowouts, Two Buys Our 24/7 Wall St. price target for Tesla is $413.49, implying 10.56% upside from $374.01. Our 24/7 Wall St. price target for Alphabet is $545.95, implying 59.68% upside from $341.91. Both earn a buy at high confidence.
Metric Tesla Alphabet Current Price $374.01 $341.91 24/7 Wall St. Price Target $413.49 $545.95 Upside 10.56% 59.68% Recommendation BUY BUY Confidence 90% 90% Blowout Quarters, Cold Market Reception Tesla posted record deliveries of 480,126 vehicles and revenue of $28.24 billion (+25.52% YoY), but operating margin collapsed to 1.4% and free cash flow flipped to negative $1.09 billion. Shares are down 5.18% on the week and 16.83% year to date.
Alphabet’s Q2 revenue of $119.80 billion (+24.23%) was overshadowed by $44.92 billion in single-quarter capex, a suspended buyback, and roughly $70 billion in combined equity and debt raised.
The stock dropped 7.64% on the week even with Cloud growth accelerating to 82%. As Sundar Pichai put it, “Q2 was an amazing quarter, with Alphabet revenues growing 24% year-over-year and Google Cloud revenues accelerating to 82% growth.”
Bull and Bear Cases in Brief Tesla bulls point to 1.48 million FSD subscriptions (+56% YoY), a seven-metro robotaxi footprint, and Optimus production lines going in at Fremont. Our bull case is $479.66. Bears note capex ballooning 141.81% against collapsing margins; the bear case is $365.83. Polymarket’s crowd is skeptical, implying a $341.37 target, well below analyst consensus of $425.22. Multiple analysts lowered their price target on the stock.
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Alphabet bulls have 58 buy ratings and a consensus target of $430.07. Our bull case is $610.65, driven by Gemini’s 950 million MAUs and Cloud momentum. Raymond James analyst Josh Beck lowered the firm’s price target on Alphabet to $400 from $425 and keeps a Strong Buy rating on the shares. The bear case is $432.97, still above spot. Bears would argue negative FCF is unsustainable, though this reflects front-loaded AI infrastructure investment as the operating business remains highly profitable.
How They Stack Up Against Meta The right cross-check for Alphabet’s capex-driven selloff is Meta Platforms (NASDAQ:META), the other hyperscaler funding an AI arms race. Alphabet trades at a trailing P/E of 26, the cheapest mega-cap in the AI cohort, while Tesla’s 344 trailing multiple is in a different universe.
Meta faces the same investor pushback on AI spending, but Alphabet layers on 32.05% operating margins and 82% Cloud growth. Against this peer set, our $545.95 target for GOOG looks reasonable, and our $413.49 target for TSLA looks appropriately cautious.
Company Trailing P/E Latest Rev Growth Alphabet 26 24.23% Tesla 344 25.52% Meta Peer benchmark Peer benchmark The Bottom Line: Both Selloffs Look Overdone The 24/7 Wall St. model rates both buy, with higher conviction on Alphabet. The 24/7 Wall St. price target of $545.95 for GOOG reflects a rare combination of cheap multiples and accelerating growth.
Tesla at $413.49 is a narrower call: the thesis strengthens if robotaxi economics prove out, and remains more uncertain if operating margin stays below 5% into Q3.
Year TSLA Target GOOG Target 2026 $413 $546 2027 $445 $680 2028 $475 $820 2029 $505 $1,020 2030 $538 $1,228 These projections assume both companies continue executing on AI and autonomy strategies. Significant upside or downside could come from robotaxi commercialization at Tesla and Cloud share gains at Alphabet.
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Key Takeaways Alphabet beat estimates, but rising AI capex overshadowed strong Cloud growth.Alphabet's Cloud revenues jumped 82% and operating income surged 212%.Alphabet lifted its 2026 capex outlook to $195-$205B, raising investor concerns. Alphabet (GOOGL - Free Report) came up with second-quarter 2026 earnings on July 22, after market close. Earnings of $9.11 per share surpassed the Zacks Consensus Estimate of $2.88 by a staggering 216.32%. The bottom line marked a remarkable improvement of 294.37% from earnings of $2.31 per share recorded in the same period last year.
The tech giant has a Zacks Rank #1 (Strong Buy) and a Momentum Score of A. As quoted on the tech giant’s earnings release, Alphabet and Google CEO Sundar Pichai described the June 2026 quarter as "amazing."
He also highlighted the growing adoption of Gemini Enterprise, noting that nearly 90% of the Fortune 100 companies are now using it. Pichai noted that Gemini models now process 22 billion API tokens per minute and the Gemini app boasts 950 million monthly active users.
However, GOOGL shares declined about 5% in pre-market trading on July 23. Despite delivering better-than-expected results, investors reacted negatively to the company's decision to raise its capital expenditure for 2026.
The move reinforces a broader trend across the technology sector, where investors have grown increasingly concerned about the escalating AI-related spending by Big Tech and increasing skepticism about the near-term payoff from AI investments. The tech giant's shares also came under pressure in pre-market trading amid investor concerns over reports of continued delays to its next flagship AI model, Gemini 3.5 Pro.
Snapshot of Q2 EarningsAlphabet posted revenues of $103.62 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate of $101.28 billion by 2.31%. This marked a substantial increase of 26.79% from the year-ago quarter.
Alphabet’s net income for the quarter saw a substantial surge of about 297.59% from the year-ago quarter to $112.11 billion. The tech giant’s operating income for the quarter was $40.77 billion, which marked an increase of 30.38% from the year-ago quarter.
Segment SnapshotsSecond-quarter revenues from Google advertising reached $81.63 billion, up 14.42% from the year-ago quarter. The segment includes Google Search & other, YouTube ads and Google Network. Revenues from Google Search & other, which reached $63.27 billion in the second quarter, marked a rise of 16.76% from $54.19 billion in the year-ago quarter, while YouTube ad revenues increased 12.85%, to reach $11.06 billion in the second quarter.
Revenues from Google Services, which includes Google advertising and Google subscriptions, platforms and devices, increased 14.53% from the year-ago quarter, reaching $94.54 billion. Operating income from the segment reached $39.54 billion for the quarter ended June 2026, marking an increase of 19.6% from the prior-year figure of $33.06 billion.
Alphabet’s Google Cloud business witnessed a substantial surge, with operating income increasing to $8.81 billion, an impressive 211.89% increase from the prior-year figure of $2.83 billion. Revenues from the Cloud segment also witnessed a substantial rise of 81.79% year over year to $24.77 billion. The segment’s revenues surpassed the Zacks Consensus Estimate of $22.77 billion by 8.77%.
The rise in Google Cloud’s revenues was driven by an increase in Google Cloud Platform (GCP) across enterprise AI Solutions and enterprise AI Infrastructure, as well as core GCP services.
Capex Surge Remains a Key Investor ConcernAlphabet reported capital expenditures of $44.92 billion for the quarter ended June 2026, nearly doubling from $22.45 billion in the year-ago quarter. Through the first half of 2026, the company's capital expenditures totaled $80.59 billion.
As quoted on a Reuters article, according to the tech giant’s CFO Anat Ashkenazi, Alphabet also raised its full-year capital expenditure outlook. Speaking on a conference call with analysts, Ashkenazi stated that the company now forecasts capex of $195 billion to $205 billion this year, up from its previous guidance of $180 billion to $190 billion for 2026.
Ashkenazi reaffirmed that Alphabet expects another meaningful step-up in capital expenditures in 2027. According to the abovementioned Reuters article, despite being one of the best-performing Magnificent Seven stocks this year, Alphabet's shares have come under pressure since late April amid concerns over delays to Gemini, high-profile executive departures and rising regulatory scrutiny.
Alphabet’s Stock OutlookAlphabet currently has an average brokerage recommendation (ABR) of 1.25 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations made by 55 brokerage firms. The current ABR compares to an ABR of 1.29 a month ago based on 55 recommendations.
Of the 55 recommendations deriving the current ABR, 46 are Strong Buy and four are Buy. Strong Buy and Buy, respectively, account for 83.64% and 7.27% of all recommendations. A month ago, Strong Buy made up 81.82%, while Buy represented 7.27%, indicating that the majority of the analysts remain bullish.
Based on short-term price targets offered by 51 analysts, the average price target for Alphabet comes to $434.82, ranging from a low of $365.00 to a high of $515.00. The average price target represents an increase of 27.11% from the last closing price of $342.09 (as of market close on July 22).
ETFs to Explore
Here, we have highlighted ETFs with heavy exposure to Alphabet.
Global X PureCap MSCI Communication Services ETF (GXPC - Free Report) has an exposure of 31.45% to GOOGL.
VanEck Communication Services TruSector ETF (TRUC - Free Report) has an exposure of 14.28% to GOOGL.
Vanguard Communication Services ETF (VOX - Free Report) has an exposure of 14.4% to GOOGL.
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) has an exposure of 14.28% to GOOGL.
iShares Global Comm Services ETF (IXP - Free Report) has an exposure of 12.22% to GOOGL.
Google's parent company Alphabet raised the top end of its CapEx plan for this year to $205 billion, but discipline on spending is becoming a concern. Eric Sheridan, Goldman Sachs co-business unit leader of its Technology, Media and Telecommunications Group in global investment research, says Alphabet is well positioned to benefit from the growing demand for AI across both consumer and enterprise markets.
