Google parent Alphabet beat earnings expectations, but Google stock fell premarket as investors reacted to massive AI spending plans. Here’s what’s really happening.
What Is Happening With Google Stock?
Google parent Alphabet (GOOG, GOOGL) surprised Wall Street by beating both earnings and revenue expectations in its latest quarterly report. However, instead of rallying, Google stock price fell nearly 5% in premarket trading, confusing many retail investors.
The reason isn’t weak performance—it’s Alphabet’s aggressive artificial intelligence spending plans.
Alphabet reported Q4 revenue of $113.83 billion, beating analyst expectations of $111.43 billion. Google Cloud revenue surged to $17.66 billion, and AI adoption across products like Gemini and DeepMind continues to accelerate. Still, investors hit the sell button.
Why Did Alphabet Shares Drop After Strong Earnings?
The sell-off comes down to one word: capex.
Alphabet announced plans to more than double capital expenditures in 2026, targeting $175–$185 billion, largely to expand AI compute capacity for Google DeepMind. While this move strengthens Alphabet’s long-term AI dominance, it raises short-term profitability concerns.
Investors are also dumping software and AI-related stocks this week, worried that AI tools could disrupt traditional SaaS revenue models faster than companies can monetize them.
According to Barclays analysts, rising costs from Infrastructure, DeepMind, and Waymo are weighing on Alphabet’s margins. Meanwhile, Deutsche Bank called Alphabet’s spending plan “stunning,” noting uncertainty in a rapidly shifting tech landscape.
When Did This Market Reaction Occur?
Alphabet shares fell sharply in Thursday’s premarket trading, dropping 4.9% as of 7:50 a.m. ET, following a nearly 2% decline the previous day.
This reaction came immediately after Alphabet’s earnings call, where executives emphasized long-term AI investments over short-term cost control.
Where Is Alphabet Investing the Most?
Alphabet’s biggest investments are flowing into:
Artificial intelligence infrastructure
Google DeepMind
Cloud computing expansion
Autonomous driving (Waymo)
Despite slightly missing YouTube advertising estimates, Alphabet’s AI and cloud growth metrics impressed analysts, especially enterprise adoption of Gemini AI models.
How Should Traders and Investors Respond?
For short-term traders, volatility in GOOG and GOOGL stock creates opportunity. Long-term investors may view this pullback as a strategic entry point into one of the world’s strongest AI ecosystems.
If you’re looking to trade Google stock, Alphabet earnings reactions, or broader AI-driven market moves, professional tools and risk management matter more than ever.
Learn Why Traders Are Moving to Eightcap
Many active traders are choosing Eightcap for its:
-
Fast execution on US stocks & indices
AI-driven market tools
Low spreads and advanced risk controls
👉 Start trading smarter with Eightcap
Breakout AI – Smarter Account Management
Want AI-powered portfolio control? Breakout AI (Split Pay) helps traders automate decisions, manage exposure, and scale accounts efficiently.