Alphabet Stock Plunges 7% After Raising 2026 Capex Outlook; Three Tech Giants Face Earnings Test This Week

Alphabet disclosed last week that it significantly raised its 2026 capital expenditure forecast to accelerate AI data center construction, triggering market concerns about artificial intelligence investment returns. The stock plummeted 7% the following day, dragging down Amazon, Meta, and Microsoft in tandem. The selloff reflects investor concerns that surging infrastructure spending may deplete cash reserves with unclear returns; Alphabet's free cash flow turned negative for the first time in the second quarter, and long-term debt surged 111% to $98 billion in the first half of 2026.

Microsoft and Meta report earnings Wednesday (July 29), followed by Amazon on Thursday (July 30). Analysts predict Microsoft's full-year capex at approximately $190.1 billion, with Amazon's estimates rising to $207.4 billion. Investors will scrutinize whether these tech giants can convert massive capital outlays into cloud growth, profitability, and cash flow—testing market patience with the artificial intelligence spending race.