Stock Market Today, July 23: Alphabet Slides 7% After Announcing 2026 Capex of Roughly $200 Billion

Alphabet (NASDAQ:GOOGL), a search, ads, video, cloud, and AI infrastructure platforms provider, closed at $317.69, down 7.13%. Investors are reacting to higher AI-related spending and watching whether cloud growth can support returns on that build-out. Trading volume reached 68.6M shares, coming in about 111% above its three-month average of 32.5M shares. Alphabet IPO’d in 2004 and has grown 12,557% since going public.

How the markets moved today

The S&P 500 (SNPINDEX:^GSPC) fell 1.20% to 7,409, while the Nasdaq Composite (NASDAQINDEX:^IXIC) dropped 2.15% to 25,138. Among internet content and information, digital advertising, and cloud services rivals, Microsoft closed at $381.58, down 2.24%, and Meta Platforms finished at $606.10, down 3.36%.

What this means for investors

On the surface, it was a great-looking quarter for Alphabet as:

• sales rose 24%

• search revenue increased 17%

• Google Cloud sales spiked 82%

• Gemini reached 950 million monthly active users

• tokens per minute rose from 16 billion to 22 billion

• YouTube advertising sales grew by 13%

• income from operations jumped 30%

However, the market seemed to focus solely on management’s guidance that capex would land between $195 billion and $205 billion in 2026 — and would “increase significantly” in 2027 — which sparked today’s sell-off. Capex rose by 100% in Q2 to $45 billion and caused free cash flow to turn negative for the first time in Alphabet’s publicly traded history.

While this isn’t inherently bad, the company needs to show it can deliver strong ROI from these massive capex outlays, or else all this heavy spending could weigh on the stock’s price. Personally, I think it’s far too early to judge whether these investments will pay off, as they may take years to develop into anything that generates profit. Still, I understand the market’s cautious stance given the immense scale of the spending. For now, Alphabet remains my favorite AI stock with its array of interconnected offerings and robust growth optionality, even if AI eventually becomes commoditized over the uber-long term.

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