Google stock slides after Alphabet earnings highlight huge 2026 AI spending

Google stock fell Thursday after Alphabet earnings delivered strong growth but paired it with a sharply higher 2026 spending outlook, reviving investor anxiety about just how expensive the next phase of artificial intelligence will be. The selloff in GOOG and GOOGL came even as the company posted record annual revenue and pointed to accelerating adoption for Google AI products, including the Gemini app.

As of 9:59 a.m. ET on Thursday, Feb. 5, 2026, both Alphabet share classes were down a little more than 3%, while Broadcom stock rose as traders positioned for another leg of AI infrastructure demand.

Google stock price today: GOOG and GOOGL move opposite Broadcom

Here’s where the names tied most closely to this story traded at 9:59 a.m. ET:

The divergence reflects a familiar pattern in “AI trade” days: platform owners can get punished for higher capex, while key suppliers can rally on the same spending signal.

Alphabet earnings: big quarter, bigger checkbook

Alphabet reported fourth-quarter 2025 revenue of $113.8 billion and net income of $34.5 billion, with annual revenue topping $400 billion for the first time. Strength was broad-based:

• Advertising revenue rose to $63.1 billion in the quarter.

• Cloud revenue climbed to $17.7 billion, up 48% year over year.

• The company pointed to a growing backlog of cloud contracts, signaling demand that is being booked but not yet recognized as revenue.

What changed the mood was the 2026 capital-expenditure outlook: Alphabet said it expects to spend roughly $175 billion to $185 billion, far above what many investors had penciled in. The company framed the spending as necessary to meet AI and cloud demand, but the market reaction suggested lingering fear of an “arms race” that keeps margins under pressure.

Artificial intelligence news: Gemini scale and AI-first product pushes

A major headline from the earnings discussion was the reported scale of Gemini, with the company saying the Gemini app has reached about 750 million monthly active users. Alphabet also highlighted a fast cadence of AI-related product launches and a deeper integration of newer Gemini models into Search experiences such as AI Overviews and AI Mode.

The strategic message was clear: Alphabet wants AI to be a distribution advantage—built into Search, Gmail, Chrome, and its developer offerings—rather than a standalone chatbot competing only on novelty. The financial question is whether the cost of that ambition (chips, power, data centers, and networking) can be matched by monetization fast enough to keep investors comfortable.

Google AI monetization versus capex concerns

Alphabet’s bulls point to three monetization pathways that can justify heavy spending:

1. Search and ads: better targeting and higher-value queries if AI features increase engagement and conversion.

2. Cloud: more AI infrastructure and model-serving demand from enterprise customers.

3. Subscriptions and bundles: continued growth in paid products across consumer services.

The bear case is mostly about timing and competition. If rivals compress pricing for AI services, or if customers optimize workloads to cheaper options, the return on capex could take longer to show up. That risk looms larger when investors are already sensitive to big spending plans across the sector.

Broadcom stock rises on the same signal

Broadcom’s gains Thursday underscored how Alphabet’s capex forecast is being interpreted as good news for the plumbing behind AI: accelerators, custom silicon programs, and—critically—high-speed networking that connects compute inside and between data centers.

Broadcom sits in a sweet spot because the AI buildout is not only about GPUs or model weights; it’s also about the networking and infrastructure that keeps expensive compute utilized. When a hyperscaler signals a bigger checkbook, suppliers tied to the data-center stack often get an immediate bid.

What to watch next: guidance, margins, and the next catalyst

Near term, the market’s focus is likely to stay on three practical indicators:

• Capex-to-margin math: whether Alphabet can protect operating margins while spending at the high end of its range.

• Cloud profitability: whether cloud growth remains elevated and whether margins continue to expand as scale rises.

• AI product monetization signals: any concrete disclosure around ad performance in AI-heavy search flows and enterprise uptake for Gemini offerings.

For Google stock, the next leg is less about whether AI is real—investors already accept that—and more about whether Alphabet can prove it can spend aggressively without sacrificing the earnings power that made it a defensive megacap for years.

Sources consulted: Alphabet Investor Relations, Financial Times, The Verge, CBS News