Alphabet’s stock retreated to around $367 in mid-June 2026 as investor enthusiasm over record earnings and cloud growth clashed with concerns about a $190 billion annual AI capital spending plan and the departure of two of Google’s most prominent AI researchers within days of each other.
The company delivered Q1 2026 revenue of $109.9 billion, up 22% year-over-year and exceeding analyst expectations of $107.2 billion, according to CNBC. Operating income grew 30% to $40 billion, extending the company’s streak of double-digit revenue growth to eleven consecutive quarters.
Google Cloud was the earnings engine. The division reported $20.03 billion in revenue—a 63% increase from the prior year—well above the $18.05 billion estimate, according to StreetAccount data reported by CNBC. The cloud unit’s backlog nearly doubled quarter-on-quarter to over $460 billion, driven by surging enterprise demand for AI solutions. CEO Sundar Pichai told analysts that Alphabet is “compute constrained in the near term,” noting that “our cloud revenue would have been higher if we were able to meet the demand.”
Capex Surge and Equity Raise Weigh on Sentiment
The earnings beat came alongside a stark acknowledgment of the scale of Alphabet’s AI infrastructure bet. The company raised its full-year 2026 capital expenditure guidance by $5 billion to a range of $180 billion to $190 billion, according to Fortune and CNBC. In 2022, Alphabet spent approximately $31 billion in capex; the 2026 guidance represents six times that level and double the $91.4 billion spent in 2025, according to Alphabet’s June 2026 investor presentation.
To fund this expansion, Alphabet announced an $85 billion equity capital raise in early June 2026. The company initially announced an $80 billion raise on June 1, then upsized it to $84.75 billion just two days later as demand exceeded expectations, according to Bloomberg and Alphabet’s investor relations. The raise includes a $10 billion investment from Berkshire Hathaway and approximately $35 billion in underwritten public offerings, according to Reuters.
Chief Financial Officer Anat Ashkenazi told analysts that 2027 capital expenditure will “significantly increase” compared to 2026 levels, according to CNBC. Wall Street analysts noted the dilution risk and questioned whether the massive infrastructure spending would yield adequate returns. The stock pulled back from a May 2026 peak above $400, reflecting the market’s mixed reaction to record earnings offset by the scale and duration of the capex commitment.
High-Profile AI Talent Exits Underscore Competitive Pressure
The financial headwinds coincided with significant departures from Google’s AI research ranks. Noam Shazeer, vice-president of engineering and co-lead of Google’s Gemini AI models, announced his departure for OpenAI on June 18, 2026, according to CNBC. Shazeer co-authored the foundational 2017 “Attention Is All You Need” paper that introduced the transformer architecture, the foundation of modern large language models.
Two days later, John Jumper, vice-president of Google DeepMind and head of the AlphaFold team, announced his move to Anthropic, according to Reuters and TechCrunch. Jumper shared the 2024 Nobel Prize in Chemistry for his work on AlphaFold, Google’s protein-folding AI system. Reuters reported that Jumper had spent nearly nine years at Google DeepMind before his departure.
The exits marked the second and third high-profile departures from Google’s AI research organization in as many months, according to Mint. Separately, Google has displaced an estimated 1,500 to 3,000 engineers in 2026 through rolling performance cuts and restructuring of its Platform & Devices division, according to KORE1, a staffing firm analysis.
The combination of record cloud growth and massive capex commitments underscores the intensity of competition in AI infrastructure. While Alphabet’s strong Q1 results and cloud momentum suggest the spending may eventually pay off, the near-term capital intensity and talent departures have tempered investor optimism, keeping the stock near $367 and well below its May peak as the company signals even steeper spending increases ahead.
Sources
- CNBC — Q1 2026 earnings data, Google Cloud revenue, capex guidance, and CFO commentary on 2027 spending
- Reuters — John Jumper’s departure to Anthropic and Noam Shazeer’s move to OpenAI
- TechCrunch — John Jumper’s departure announcement and context
- Alphabet Investor Relations — Official Q1 2026 earnings, capex figures, and equity raise details
- Bloomberg — Equity raise upsize and Berkshire Hathaway investment
- Fortune — Capex guidance increase and full-year 2026 forecast
- StreetAccount (via CNBC) — Google Cloud revenue figures and consensus estimates
- Mint — High-profile AI departures context
- KORE1 — 2026 engineer displacement estimates
