Alphabet Faces Investor Scrutiny Amid Record Cloud Growth

Alphabet reported record growth in its cloud computing division but faced investor concerns over delays in its flagship AI model and increased capital spending plans. The company's stock dipped following the announcement of higher expenditures. Despite growth in Google Cloud revenue, Alphabet encountered negative cash flow, stirring investor caution.

Alphabet reported a record-breaking quarter for its cloud computing division on Wednesday, but investor concerns arose over delays to its flagship AI model and a $15 billion increase in capital spending for 2026.

The company now anticipates spending between $195 billion and $205 billion in capital expenditures, up from previous estimates. This update caused shares to fall about 3% in extended trading. Finance chief Anat Ashkenazi noted that significant capacity increases justified the spending plans.

Google Cloud revenue surged 82% to $24.8 billion, surpassing expectations, while the company's overall revenue beat consensus estimates. However, Alphabet's adjusted profit per share missed projections, and the company reported negative free cash flow for the first time. The AI model delays left Google trailing competitors like OpenAI in the evolving AI space.