New York, 22 July 2026
The shares of Alphabet fell by 7.5 percent after a significantly raised investment forecast for the current year. Investors are concerned that rising spending on artificial intelligence could weigh on the Google parent company's profits.
Shares of Google parent Alphabet plunged 7.5 percent to around 316 dollars on Thursday after the company raised its investment forecast for 2026 once again.
Alphabet had indeed posted strong quarterly figures the previous evening and exceeded market expectations for revenue. Nevertheless, concerns about further rising spending on artificial intelligence (AI) sent the stock on a downward spiral. The Class A and Class C shares each dropped 7.5 percent to 316 dollars in US trading, marking their lowest level since mid-April, according to the data.
Overall, the price slide wiped out just over 300 billion euros in market capitalization. The record high of around 409 dollars reached in mid-May after a steep rally has once again moved into the distant horizon. The volatility underscores how nervously the market is reacting to new medium-term forecasts from the major tech companies.
Higher Investment Forecast Alarms Investors
The background to the plunge is the significantly raised investment forecast. As the report shows, Alphabet now expects spending of 195 to 205 billion dollars for 2026. The range had only been raised in the spring from 175 to 185 billion to 180 to 190 billion. The company has thus noticeably revised its investment planning upward once again within just a few months.
Analysts attributed the higher investments primarily to the accelerated expansion of AI infrastructure. The further ratcheted-up investments at Alphabet largely reflected efforts for a rapid capacity expansion to meet rising demand, commented analyst Doug Anmuth of US bank JPMorgan, reaffirming his "Overweight" recommendation. However, he lowered his price target from 460 to 420 dollars, but advises investors to buy on dips.
DZ BANK also voted "Buy" most recently. JPMorgan had confirmed its "Overweight" rating dated 4 May 2026. The recommendations of the two banks thus stand in contradiction to the short-term market reaction: While the houses remain fundamentally positive in their outlook, investors are evidently doubting the profitability of the multi-billion-dollar AI offensive.
Analysts Remain Confident Despite Setback
The move is part of a broader race among the major tech companies to expand AI data centers and AI capabilities. In addition to Alphabet, Microsoft, Amazon and other providers are also investing massively in computing power and infrastructure to meet the growing demand for AI services. These concentrated investments are increasingly fueling market debates about the relationship between spending and future returns.
It was also highlighted on the market that the latest quarterly revenues exceeded expectations. Nevertheless, skepticism about whether the increased outflows can be offset in the short term by corresponding revenues from the cloud business and AI products prevailed on the trading day. The reaction of investors was therefore clearly negative despite the solid fundamentals.
Broad Race for AI Infrastructure
With the setback, the shares have moved noticeably away from their record high. Observers see the price decline as an indication that the valuation of Alphabet and comparable companies is increasingly being measured against concrete investment and return plans. Whether the company can meet the high expectations over the medium term is likely to set the direction in the coming quarters.