Alphabet (GOOGL) Plunges as AI Capital Expenditure Looms Over Profitability Outlook

Alphabet (GOOGL) fell 2.7% to $32,315 in late trading on February 5, 2026, despite posting results that beat expectations. The stock’s decline reflects intensifying investor focus on the company’s plan to sharply increase AI-related capital spending, with a proposed $17.5B–$18.5B investment over the next 12 months for training, inference, and cloud AI infrastructure. Analysts note Alphabet’s management has not allayed concerns about the pace of AI spending and the clarity of return timelines, amid broader tech sector volatility. The increased investment is expected to weigh on short-term profitability, with cloud growth unable to fully offset pressures from data centers, DeepMind, and Waymo. As a result, investors are favoring select AI exposure and shifting toward value sectors such as energy, industrial, and materials, while market volatility rises and the outlook for employment and inflation data looms.