Alphabet Raised $41 Billion in One Quarter to Pay for AI
Alphabet spent more on capital expenditures last quarter than it generated in operating cash flow, so it turned to stock sales and a mountain of new debt to keep the AI buildout running. What that means for shareholders is more…
Alphabet (NASDAQ:GOOG | GOOG Price Prediction, NASDAQ:GOOGL) spent $51.355 billion on capital expenditures in the third quarter of 2026, up 114.4% from the prior year. The cash-flow statement released after the close on Oct. 28, 2026 shows how it paid for that.
Alphabet raised about $41.4 billion in gross proceeds, adding $12.371 billion from common stock sales with $28.996 billion of new debt. After $3.626 billion in debt repayments, Alphabet’s net new money came to about $37.7 billion.
Alphabet bought back $0 of its own stock in the quarter, versus $11.504 billion in the third quarter of 2025.
Alphabet shares closed Oct. 28 at $324.89 and traded at $292.50 after hours around 7:59 p.m. ET, down 9.97%. The quarterly 10-Q had not appeared on EDGAR as of early Oct. 29.
What Alphabet Actually Raised in the Quarter
All of the quarter’s stock sales went through Alphabet’s at-the-market (ATM) program. Under an ATM program, a company sells new shares into the market in small tranches at the current price.
Alphabet sold 12 million Class A shares for $4.3 billion and 24 million Class C shares for $8.1 billion, leaving Alphabet $27.6 billion of capacity as of Sept. 30.
Alphabet announced the $40 billion ATM program on June 2, 2026, as part of an $84.75 billion equity raise. The third quarter was the first one in which those sales were scheduled to start.
The June release said Alphabet planned to use ATM proceeds “primarily to facilitate, for a period of time, an administrative change in how Alphabet meets tax obligations” linked to employee stock awards. In the quarter, Alphabet Inc.’s net payments for stock-based awards came to $5.368 billion.
The capex money linked directly to debt. Alphabet Inc. issued $28.7 billion of senior unsecured notes for general corporate purposes.
Dilution and Interest Costs Now Reach GOOGL Owners
Alphabet’s diluted share count rose to 12,368 million from 12,203 million, up about 1.4%. Buybacks used to reduce that count, which helped earnings per share grow faster than profits, but the count is now going up.
Alphabet Inc.’s interest expense rose to $967 million from $143 million. Alphabet’s long-term debt reached $125.102 billion, versus $46.547 billion at the end of 2025. Alphabet Inc. also paid $298 million in preferred dividends.
Spending Has Outrun Cash Flow for Two Quarters
Alphabet’s operating cash flow of $42.290 billion did not cover capex, so free cash flow was negative $9.065 billion, following Alphabet’s negative $5.855 billion in the second quarter. Alphabet’s trailing 12-month free cash flow fell about 73% to $19.747 billion.
Alphabet CFO Anat Ashkenazi kept 2026 capex guidance at $195 billion to $205 billion. She also said, “We continue to expect our CapEx to increase significantly in 2027.”
Ashkenazi said Alphabet ended the quarter with $265.1 billion in cash and marketable securities. That total includes $90.4 billion of stock holdings, the same kind of asset behind the quarter’s $8.7 billion loss. That is part of why Alphabet borrows anyway. The release did not say when Alphabet will use its remaining ATM capacity, and it gave no figure for 2027 capex.
What Cloud Growth Means for GOOGL Owners
The spending is likely already bringing in revenue fast enough to justify some dilution. Google Cloud revenue rose 103% to $30.709 billion, and operating income reached $11.121 billion, up from $3.594 billion a year earlier.
With a debt-to-equity ratio of 0.143 and a trailing P/E of 14, Alphabet can keep borrowing without stressing its balance sheet. Free cash flow may stay negative through 2027, which is likely the cost of Alphabet’s expansion at this stage.
The fourth-quarter call will show whether this argument holds, and it weakens if Alphabet Inc. sharply raises 2027 capex while Cloud growth slows well below 103%, or if the 10-Q shows it quickly drawing down the $27.6 billion left in the ATM program. A move back above the $324.89 close would show the market has absorbed the raise.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
