Investors react negatively to Alphabet’s raised $200 billion capex guidance, pressuring tech stocks ahead of Meta’s Q2 report.
Alphabet’s Q2 revenue rose 24% year-over-year to $119.76 billion, driven by 82% growth in Google Cloud. Despite strong earnings, the stock fell 6% after the company increased its capex guidance from $185 billion to $200 billion, spooking investors over AI spending levels.
The sell-off extended to other major tech stocks, setting a cautious tone ahead of Meta Platforms’ earnings report on July 29. Meta, like Alphabet, has invested heavily in data centers but lacks a cloud division to monetize AI capacity, raising questions about its spending efficiency.
Markets remain sensitive to capex trends as AI infrastructure costs surge, with Alphabet’s guidance revision highlighting the pressure on profitability despite revenue growth.