Alphabet (GOOGL, GOOG) Shares Drop on $175B-$185B 2026 AI Capital Plan

Alphabet (GOOGL, GOOG) shares fell as much as 5% on February 5, 2026, after the company announced 2026 capital expenditures of $175B-$185B, more than double 2025’s $91.4B and well above the $120B estimate. The tech giant said the spending will focus on AI computing infrastructure to develop frontier models and support Cloud and Services growth. In Q4 2025, revenue rose 18% to $113.8B, beating $111.4B estimates; EPS reached $2.82 from $2.15 YoY. Google Cloud revenue climbed 48% to $17.7B, and Google Services revenue increased 14% to $95.9B. CFO Anat Ashkenazi stressed the spending maintains financial health, and CEO Sundar Pichai highlighted momentum in Gemini AI and the Gemini app with over 750 million MAUs. The broader Magnificent Seven group fell about 5% over the period, while Alphabet’s spending and product launches have driven recent gains. RBC analyst Brad Erickson said the higher spend is warranted by strong Q4 performance and AI momentum.