Alphabet shares fall after hiking AI spending despite solid Q2 earnings
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The news: Shares in Alphabet fell over 3% in after-hours trading to USD330 ($471) after the Google parent raised its full-year capital expenditure forecast above analyst expectations.
The numbers: Google said it expects its full-year capital expenditure range to be between USD193 billion and USD200 billion, exceeding analysts expectations of USD186 billion to USD188 billion, as reported by Bloomberg.
Second-quarter revenue rose to USD119.80 billion, up from USD96.43 billion a year ago. Net income jumped to USD41.39 billion, a significant increase from USD28.20 billion last year.
Operating income also saw an increase to USD40.77 billion, up from USD31.27 billion a year ago.
The company, however, recorded a negative free cashflow of USD5.8 billion for the first time ever as a publicly traded company as it plans to ramp up its AI spending.
The context: The higher capital expenditure guidance reflects the company’s efforts to accelerate the expansion of its AI computing capacity and book more revenue from cloud-computing clients, however this strategy faces ongoing scrutiny from investors who demand evidence to justify these massive capital infrastructure investments.
