Google Stock Nosedives 7% on Earnings Day: $138 Billion Wiped Out Despite Revenue Blowout

A stark warning is flashing for Google stock today as Alphabet shares plunged nearly 7%, erasing over $138 billion in market value despite crushing Q2 revenue estimates. The sharp 24-point drop to $318 in Thursday’s trading represents a swift 10% correction from recent highs, leaving investors on edge as the Nasdaq-listed giant fails to sustain its upward momentum on the charts.

Here’s Alphabet’s Earnings Call Details and Revenues

Alphabet’s earnings call saw stellar revenues that outweighed Wall Street expectations by a wider margin. It also delivered its 12th consecutive quarter of double-digit revenue growth, making it stand apart from the rest. Below is the table on Q2 revenues vs Wall Street forecast, along with the year-on-year growth.

Why Did Google Stock Drop 7%?

The primary catalyst for the price drop was Alphabet’s increasing capital expenditure guidance on AI. Chief Financial Officer Anat Ashkenazi revealed that Alphabet is raising its capex to $205 billion for 2026, from the previous $180 billion. That’s an additional $25 billion for the year, and this did not sit well with Wall Street. Institutional giants pulled the plug in a series of sell-offs, bringing Google stock’s price down to $318 with a 7% decline.

Wall Street has been increasingly anxious about overspending, and the sell-off was on the cards. Analysts say that Alphabet’s relentless data center buildouts are eroding capital discipline without offering a clear timeframe for near-term return on investment (ROI). The increase in capex will haunt Google stock this year, as Wall Street is not impressed with the development until real returns flow in. They see it as a cash burn, and believe increasing server farms are a major red flag.