Alphabet Class A (NASDAQ:GOOGL | GOOGL Price Prediction) and Class C (NASDAQ:GOOG) shares are down 6% in Thursday morning trading, with GOOGL stock at $321.65 and GOOG stock at $320.76. The slide follows Alphabet’s Q2 2026 report, released after Wednesday’s close.
The drop caps a rough week for Alphabet (GOOGL) stock after a 79% one-year run. The broader tape isn’t helping, with the NASDAQ 100 lower by 1.36% this morning.
Capex Guidance Hike Overshadows Cloud Blowout
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Alphabet’s headline numbers were strong. The company’s total revenue reached $119.8 billion, up 24% year over year, while Google Cloud revenue accelerated to $24.77 billion, up 82%. Google noted 950 million monthly active users on Gemini and a Cloud backlog of around $514 billion.
The issue here is spending. Alphabet raised its full-year 2026 capital expenditure guidance to $195 billion to $205 billion, up from $180 billion to $190 billion, and signaled that capex will rise again in 2027. Reported EPS of $9.11 was heavily inflated by a roughly $99 billion equity-securities gain, so this wasn’t a clean operating blowout. Furthermore, Alphabet’s Q2 free cash flow came in at -$5.9 billion.
Analyst Targets Trimmed, Ratings Held
Sell-side notes echoed the mixed message. Cantor Fitzgerald lowered its Alphabet (GOOGL) stock price target to $420 from $435, keeping an Overweight rating, citing a strong quarter with Google Cloud Platform outperforming and expanding margins, offset by higher AI infrastructure spending and limited EBIT upside.
Meanwhile, Raymond James cut its GOOG price target to $400 from $425 while maintaining Strong Buy, calling results largely in line, with YouTube and Cloud outperforming and Search slightly weaker. The firm’s focus shifts to Gemini 4 performance and future model development. The pattern is telling: trimmed targets, maintained bullish ratings.
Peers Drift Lower on Broad Tech Weakness
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Meta Platforms (NASDAQ:META) stock is down 3% to $610.30, and Snap (NYSE:SNAP) stock is off 1% to $4.43. The moves look more like a function of the down NASDAQ 100 than direct spillover from Alphabet, though sector-wide AI capex anxiety is a shared backdrop. Meta Platforms is itself a heavy AI spender, having raised its 2026 capex guidance to $125 billion to $145 billion.
For diversified exposure to the group, the Global X Social Media ETF (NASDAQ:SOCL) holds Alphabet, Meta Platforms, and Snap. It’s a narrow, single-theme thematic fund heavily weighted toward international social-media names, so an Alphabet-specific move barely nudges the ETF, and concentration risk cuts both ways.
What to Watch
The bull case for Alphabet stock still runs through Cloud momentum and Gemini adoption, but the market is repricing how much AI spending it takes to stay ahead. Investors can watch for whether the $322 area holds into the close, and how analysts frame the capex-to-payoff timeline in follow-up notes today.
Investors may consider keeping their position sizes modest here, weighing Cloud and AI momentum against the free-cash-flow impact of accelerating capex. The next test for the AI capex narrative comes when Meta Platforms and other hyperscalers report their own quarters in the days ahead.
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