Markets GOOGL AUG 03, 2026

Alphabet clears $119.8B but sinks 7% as 2026 capex guide vaults to $205B

Google Cloud grew 82% to $24.8B and consolidated revenue rose 24% — then the stock cracked on a $15B capex-guide hike that dragged Amazon, Microsoft and Meta into the selloff.

BY HENLEY MARRAST · MARKETS DESK

Alphabet posted a Q2 print that on any other tape would’ve printed green: consolidated revenue up 24% to $119.80 billion against an LSEG consensus of $116.93 billion, Google Cloud growing 82% to $24.8 billion, Google Services up 15% to $94.5 billion, and operating margin two points wider at 34%. The stock closed down 7% on Thursday. Adjusted EPS of $2.85 came in two cents light, but that’s not what broke it.

What broke it was the number stapled to the release. Alphabet lifted its 2026 capex guide to $195–$205 billion, up from $180–$190 billion, blowing past Visible Alpha’s roughly $188 billion consensus. That’s a $15 billion hike at the midpoint. Finance chief Anat Ashkenazi attributed the raise “primarily due to an acceleration in the delivery of capacity to meet growing demand” and “in a supply-constrained environment,” and reiterated that 2027 will “significantly increase” from here.

The reaction wasn’t isolated. Amazon, Microsoft, and Meta all sagged into Thursday’s close ahead of their own prints. Amazon already walked its own February guide of $200 billion up to $220 billion; Meta is tracking toward roughly $138.9 billion with room to $145 billion. Group compute spending is on pace for about $380 billion in 2026, roughly double 2025.

Wells Fargo’s Ken Gawrelski said the guide “compels investors to re-underwrite the capacity ROI thesis.” The underwriting problem is visible in the balance sheet. FactSet pegs incremental debt at the five largest hyperscalers at 32% of capex on an LTM basis by mid-2026, up from 9% in FY24. Alphabet itself priced an $84.75 billion equity raise in June, roughly 2% dilution by Wells Fargo’s math, to fund the build.

The demand side is real. Gemini has 950 million monthly actives; Antigravity has 2.4 million weekly. The market is being asked to trust that HBM price inflation and a doubling of compute spend convert to durable cloud revenue on the other side. Steve Eisman put the reflexivity plainly: if hyperscalers cut spending, “the market would go straight down.” That’s the trade the tape is now pricing. A 7% drop on a 24% revenue beat is what it looks like when the ROI clock starts running.

Sources

About the author

Henley Marrast

MARKETS DESK

Henley Marrast covers AI-equity flow, accelerator demand, and earnings prints for AI Sheet Report. She leads coverage of the public AI complex from the New York markets desk, with a focus on the daily tape and quarterly results. She has been writing about technology markets for several years.