Alphabet Stock Drops 15% From Peak on AI Spending Concerns

Alphabet's stock has fallen sharply from its all-time high, erasing hundreds of billions in market value as investors question the company's position in the artificial intelligence race and its heavy spending on infrastructure. The decline follows a period of strong performance where the stock had soared more than 150% over the previous year, making it one of the top performers in the S&P 500.

The selloff intensified after Alphabet's second-quarter earnings report in late July 2026. While the company posted strong results, including a 24% year-over-year revenue increase to $119.8 billion and an 82% surge in Google Cloud revenue to $24.8 billion, it also raised its outlook for capital expenditures for the year to between $195 billion and $205 billion, up from a previous estimate of $180 billion to $190 billion. The company reported negative free cash flow for the quarter, a stark contrast to its historical profitability, as it funds a massive buildout of data centers and AI capabilities. This shift has made some investors nervous about the company taking on more debt and selling equity to finance its ambitions.

At the heart of the concern is Alphabet's standing in the competitive...