Alphabet Suspends Buybacks as AI Spending Drives Debt
Alphabet Inc. suspended stock buybacks and saw shares decline after reporting massive capital expenditures for generative AI despite strong second-quarter revenue growth.
Shares of Alphabet Inc. declined 10.39% over the past month to $338.86, falling from a recent high of $404.23. The market pullback follows the company's second-quarter 2026 financial results, which showed strong top-line growth with revenue reaching $119.80 billion, a 24.23% increase year-over-year. Earnings per share of $9.11 also beat analyst estimates, while Google Cloud grew 82% to $24.8 billion.
Despite the revenue gains, investors reacted negatively to rising costs and capital expenditures. Alphabet reported quarterly capex of $44.92 billion and projected total 2026 spending between $175 billion and $185 billion. This aggressive investment strategy resulted in a negative free cash flow of $5.86 billion and pushed long-term debt to $98.2 billion.
To manage these financial pressures, management suspended stock buybacks. CEO Sundar Pichai defended the spending trajectory, stating that the company is more bullish on the opportunities provided by generative AI than it was a year ago.
