Alphabet reported stronger-than-expected results for the second quarter of 2026, posting earnings per share of $9.11 and revenue of $11.98 billion, both above Wall Street expectations of $2.88 and $11.651 billion. Even so, the stock fell in after-hours trading as investors focused on the company’s higher full-year capital expenditure forecast and possible margin pressure in coming quarters.
According to BIT (bit.com) market data, Alphabet shares dropped to $327.4 after the close, down 4.24%. The company raised its 2026 capex forecast to $19.5 billion-$20.5 billion from a prior range of $18 billion-$19 billion. Management said the increase reflects accelerated capacity delivery to meet demand, with about 60% of spending going to servers and 40% to data centers and network equipment.
Alphabet also said demand for AI infrastructure remains strong, though supply constraints are still limiting the pace of capacity delivery. Management flagged potential margin pressure in the third quarter from the use of third-party capacity, while the integration of Wiz is expected to create a short-term headwind in 2026. The company said demand for Search, YouTube, and cloud is expected to remain strong, and that AI features should drive greater usage and improve monetization. Most revenue from TPU system sales is now expected to be recognized in 2027 rather than 2026.
Alphabet reported better-than-expected results for the second quarter of 2026, but the stock fell in after-hours trading after the company raised its full-year capital expenditure outlook.
The company posted earnings per share of $9.11 and revenue of $11.98 billion, above Wall Street expectations of $2.88 and $11.651 billion, according to BlockBeats.
After-hours decline follows higher capex guidance
Despite the earnings beat, investors focused on Alphabet’s larger spending plan and pressure on margins in the near term. According to BIT (bit.com) market data, Alphabet shares fell to $327.4 in after-hours trading, a decline of 4.24%.
BlockBeats said market analysis pointed to the revised capital expenditure forecast as the main reason for the after-hours sell-off. Alphabet lifted its full-year 2026 capex guidance to $19.5 billion to $20.5 billion, up from a previous range of $18 billion to $19 billion.
How Alphabet plans to allocate spending
Management said the increase reflects a faster pace of capacity delivery to meet demand. About 60% of that spending is expected to go to servers, with the remaining 40% allocated to data centers and network equipment.
The company said demand for AI infrastructure remains strong, but supply constraints are still slowing the pace of capacity delivery.
Margin pressure and revenue timing
Management also said the use of third-party capacity in the third quarter could create some margin pressure. The integration of Wiz is also expected to be a short-term headwind in 2026.
Looking ahead, Alphabet said demand for Search, YouTube, and cloud is expected to remain strong. The company added that AI features should drive more usage and improve monetization.
Alphabet also said that most of the revenue from TPU system sales is expected to be recognized in 2027 rather than 2026.
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