On July 23, Alphabet declined 3.01% overnight, trading at $331.72/share, with turnover of $72.56 million. The decline was triggered by concerns over the company's massive AI infrastructure spending despite an otherwise strong Q2 earnings report.

Alphabet reported Q2 EPS of $9.11, far exceeding the consensus estimate of $2.90, while revenue reached $119.8 billion, up 24% year-over-year. Google Cloud revenue surged 82% to $24.8 billion with backlog growing to $514 billion. However, single-quarter capital expenditure doubled to $44.9 billion, causing free cash flow to turn negative at -$5.9 billion — the first such occurrence in decades. The company further raised its full-year capex guidance to approximately $195-205 billion, up from the prior $180-190 billion range.

Additionally, core search engine revenue came in slightly below Wall Street expectations, intensifying concerns about traditional advertising growth momentum during the AI transition. CEO Pichai stated AI investments are redefining the entire business, while the CFO warned that leasing third-party compute capacity will pressure near-term margins.

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