Alphabet increases spending to $205 billion due to AI race
Alphabet raised its capital expenditure forecast for this year to $205 billion, which again caused concern among investors and negatively affected the share price.
Alphabet raised its capital expenditure forecast for this year to $205 billion, which again caused concern among investors and negatively affected the share price.
Google's parent company raised its capital spending forecast for this year to $195 billion to $205 billion, up from a previous estimate of $190 billion. Its shares fell more than 6% on Thursday, Bloomberg reported .
In addition, Alphabet spent more cash than it earned in 3 months, which is the first time this has happened in 20 years (since 2004, when the company went public). Cash reserves decreased by $5.9 billion in the quarter due to excessive investments in the future.
Despite all this, total cloud revenue for the period ended June 30 was $24.77 billion, up 82% from a year earlier and above the $22.46 billion analysts had expected. The company’s cloud backlog — a measure of contract work that hasn’t yet been recognized as revenue — rose to $514 billion from about $460 billion a quarter earlier.
Search advertising brought in $63.27 billion in revenue, slightly below estimates. This segment remains the backbone of Google’s advertising business and has so far successfully withstood competition from AI chatbots.
The company also said that capital expenditures in the second quarter were $44.92 billion, which also exceeded Wall Street expectations of $44.15 billion. Total sales, excluding affiliate payments, in the second quarter were $103.6 billion, beating the average analyst estimate of $101.07 billion. Net income was $9.11 per share, significantly exceeding Wall Street forecasts.
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