Why Alphabet Stock Crashed Today

Alphabet shares plummeted 6.6% despite reporting Q2 earnings per share of $9.11, crushing the $2.88 consensus estimate, and revenue of $119.8 billion against expectations of $116.5 billion. The sell-off centers on the company's announced AI capital expenditure plan of $195 billion to $205 billion for the year, which flipped Q2 free cash flow to negative $5.8 billion even as GAAP profits grew.

The market is repricing GOOGL on investment risk rather than operational performance. The company is burning cash to build AI infrastructure while competitors scale similar capabilities, raising questions about return on capital and margin trajectory. The negative free cash flow marks a sharp reversal for a company historically known for cash generation, and the capex guidance implies continued pressure through year-end.

Revenue beat and earnings surprise confirm Google's core advertising and cloud businesses remain robust, but investors are demanding visibility on AI monetization timelines to justify the spend.