By Mckenna James blog February 5, 2026, 7:14 am EST
In this article: [$GOOGL] [GOOG] [NVDA] [AVGO]
The stock market witnessed a rare spectacle this morning: Alphabet (GOOGL) delivered a massive Google earnings beat, yet its shares tumbled in premarket trading. While the search giant surpassed a historic milestone—exceeding $400 billion in annual revenue for the first time—investors were “spooked” by a different set of numbers.
The culprit? A staggering artificial intelligence news update from the Google earnings call where executives outlined a plan to spend up to $185 billion on capital expenditures (Capex) in 2026. This aggressive ramp-up to fund Google AI infrastructure has triggered a wave of “sticker shock” across Wall Street.
Google Earnings: By the Numbers
Despite the stock’s dip, the GOOGL earnings report for Q4 2025 was objectively strong. The company beat estimates across the board:
| Metric | Reported | Wall St. Estimate |
| Revenue | $113.83 Billion | $111.43 Billion |
| EPS | $2.82 | $2.64 |
| Google Cloud Revenue | $17.66 Billion | $16.18 Billion |
| Net Income | $34.5 Billion | — |
Google Cloud was the undisputed star, surging 48% year-over-year. CEO Sundar Pichai noted that the cloud backlog has doubled to $240 billion, driven by surging demand for Gemini AI enterprise solutions.
The $185 Billion Gemini Gamble
The reason Alphabet stock is under pressure lies in the projected costs of maintaining its lead in the AI arms race. CFO Anat Ashkenazi “stunned the world” by guiding for 2026 Capex between $175 billion and $185 billion. For context, the company spent roughly $91.4 billion in 2025.
“We are in a relentless innovation cadence,” Pichai told analysts. “Our Gemini models now process over 10 billion tokens per minute. To meet this demand, we must expand our infrastructure.”
This massive spending is targeted at:
- Google DeepMind: Training the next-generation Gemini 3 models.
- Technical Infrastructure: Scaling data centers and AI servers.
- Custom Silicon: Ramping up production of Google’s internal TPUs (Tensor Processing Units).
The Winners: Broadcom and Nvidia
While Google stock price wavered, the “pick and shovel” makers of the AI world are celebrating. Broadcom stock (AVGO) surged 5.6% premarket, while Nvidia (NVDA) rose 3.4%.
Broadcom is a primary beneficiary of Google’s shift toward custom chips. As Alphabet spends billions to build its own Gemini AI hardware, it relies on Broadcom’s IP and semiconductor expertise. This “forced spending” by Hyperscalers is creating a direct revenue pipeline for the chip sector, even as it creates margin pressure for Alphabet.
Market Sentiment: Why is Alphabet Stock Falling?
- Margin Fears: The $185B spend represents a terrifying escalation in costs that could weigh on GOOG earnings and profitability for years.
- Depreciation Hit: Higher Capex leads to “meaningfully increased” depreciation expenses in 2026, which can eat into net income.
- Software Sector Anxiety: Investors are dumping software stocks this week over concerns that artificial intelligence news suggests AI tools might replace traditional software products rather than just enhancing them.
- YouTube Shortfall: While Alphabet earnings were a beat, YouTube advertising revenue of $11.38 billion slightly missed the $11.84 billion estimate, causing concern about ad-market saturation.
The Bottom Line
The alphabet stock price is currently caught in a tug-of-war between stellar fundamentals and future cost anxieties. For long-term bulls, the GOOGL stock dip is seen as a “gift,” given the explosive growth in Cloud and the 750 million monthly active users on the Gemini app.
However, for now, the market is fixated on the price tag of progress. Google has placed the largest hardware order in history, and while NVDA and AVGO are cashing the checks, GOOG shareholders are left waiting for the ROI.
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