Alphabet announced second-quarter earnings on Wednesday and raised the top end of its 2026 capital expenditure forecast to $205 billion as the company rushes to open new data centers for artificial intelligence. Shares of Google's parent fell 7% on Thursday, with Amazon, Meta and Microsoft stocks also declining. The stock drop reflects increased investor scrutiny of infrastructure investments resulting in reduced cash reserves with uncertain returns, as Amazon, Meta and Microsoft prepare to report quarterly results this week.
Alphabet Stocks Fall 7% Following Capex Forecast Increase
Alphabet shares slid 7% on Thursday after the company announced plans to boost its 2026 capex forecast. Amazon, Meta and Microsoft stocks all fell as well. The stock is up about 70% over the past year. Mark Mahaney, head of internet research at Evercore ISI, wrote in a note Wednesday that Alphabet's capex boost "increases the odds of similar behavior" from Amazon and Microsoft.
Microsoft and Meta Report Earnings Wednesday, Amazon Thursday
Microsoft and Meta will report after the close on Wednesday. Amazon follows on Thursday. In April, Microsoft projected $190 billion worth of capex and finance leases for the year, including $25 billion from higher component prices, as AI chip demand eats up memory supply. Analysts polled by Visible Alpha expect $190.1 billion from Microsoft. Following Alphabet's report, the consensus for Amazon crept up almost $2 billion to $207.4 billion, according to Visible Alpha.
Amazon Capex Forecast Maintained at $200 Billion
Amazon in February guided to $200 billion in capex for 2026, the highest among the group until Alphabet lifted the top end of its forecast to $205 billion. The company maintained that forecast in April, with CEO Andy Jassy telling investors at the time that its "plan is largely the same." Several analysts wrote in research notes earlier this month that they expect Amazon to lift its capex guide for the year. Amazon's long-term debt shot up 81% to $119 billion from Dec. 31 to March 31. Alphabet's rose 111% to $98 billion during the first six months of 2026, while the company turned cash flow negative in the second quarter for the first time.
Google Cloud Records 82% Revenue Growth in Second Quarter
Google's cloud business recorded 82% expansion in the second quarter, the fastest growth since at least 2020, after increasing 63% in the prior period. Google's cloud was 30% the size of AWS in 2020 and nearly 50% in the first quarter of 2026. AWS revenue rose 28% in the first quarter, and analysts surveyed by FactSet expect nearly 32% for the second quarter. Revenue from Microsoft's Azure and other cloud services grew 40% in the first quarter, with FactSet's second-quarter consensus at 39%.
Meta Capex Forecast Could Reach $145 Billion
Meta is expected to record capex this year of $138.9 billion and told investors in April that the number could reach $145 billion. The company is now looking to sell computing power to third parties. Analysts surveyed by FactSet expect Microsoft's free cash flow to go negative in the fourth quarter for the first time since at least 2001. Amazon's free cash flow flipped into the red in the first quarter, and analysts surveyed by FactSet forecast it will stay there for the full year.
Alphabet CEO Defends Cloud Strategy
On Alphabet's earnings call, CEO Sundar Pichai contended that his company's strategy of calling in outside vendors for extra computing power to meet cloud demand will yield attractive margins within years, despite the cost.
FAQ
What did Alphabet announce on Wednesday?
Alphabet announced second-quarter earnings on Wednesday and raised the top end of its 2026 capital expenditure forecast to $205 billion as the company rushes to open new data centers for artificial intelligence.
How much did Alphabet stocks fall on Thursday?
Shares of Google's parent company Alphabet fell 7% on Thursday following the capex forecast announcement, with Amazon, Meta and Microsoft stocks also declining.
When do Amazon, Meta and Microsoft report quarterly earnings?
Microsoft and Meta will report after the close on Wednesday. Amazon follows on Thursday.
