Alphabet surprisingly lifted its full-year capital expenditure forecast, sending its stock down 4% in after-hours trading.

Alphabet reported stronger-than-expected Q2 2026 results, with earnings per share (EPS) of $9.11 and revenue of $119.8 billion, beating Wall Street consensus estimates of $6.23 EPS and $116.51 billion in revenue respectively. However, investors’ concerns over the company’s sharply increased capital expenditure plan and recent margin pressure pushed Alphabet’s share price down 4.24% to $327.4 in after-hours trading, per market data from BIT (bit.com). Market analysts attribute the post-session sell-off to Alphabet raising its full-year 2026 capital expenditure forecast to $19.5–$20.5 billion, up from the prior projection of $18–$19 billion. Management stated the hike reflects plans to accelerate capacity delivery to meet demand, with roughly 60% of the expenditure allocated to servers and 40% to data centers and networking equipment. The company noted demand for AI infrastructure remains robust, though supply constraints are still limiting the pace of capacity delivery. Management also added that third-party capacity usage in Q3 may exert some margin pressure, while the integration of Wiz will create short-term headwinds in 2026. Looking ahead, Alphabet expects sustained strong demand for its Search, YouTube, and Cloud businesses, with AI features driving higher usage and improved monetization. The company also noted that most revenue from TPU system sales is expected to be recognized in 2027, not 2026.