By most measures, Alphabet’s quarterly earnings this week looked very good. Cloud revenue surged a staggering 82%. Nearly every line in the income statement came in ahead of expectations. Even search, despite years of predictions that generative AI would hollow out Google’s core business, grew 17%.
Go back in time and show those numbers to a trader in 2024 and they’d probably have started shopping for a bigger boat. Absent context, it looks like exactly what all that AI spending was supposed to do: make number go up.
The traders of 2026 were somewhat less enthused. Alphabet stock fell 7% on Thursday, with the sell-off accelerating after CFO Anat Ashkenazi told analysts the company was raising its full-year capex guidance to between USD195 billion ($279 billion) and USD205 billion. Not even the rosiest revenue figures could drown out the dull roar of those numbers.
The anxiety about AI returns is obviously not new. We’ve been covering it for years at Capital Brief. Every earnings season since ChatGPT rewired capital markets has produced variations on the same question: how much longer can the Arc’teryx and cold plunge set in Silicon Valley keep incinerating hundreds of billions of dollars before we see a bit of ROI?
