Tech Stocks to Watch: Alphabet Lifts 2026 Capex Forecast to $195B-205B

Alphabet is spending more to keep up with demand for artificial intelligence. On July 22, 2026, the Google parent raised its 2026 capital expenditure forecast to $195 billion-$205 billion, up from $180 billion-$190 billion. The increase comes as Google Cloud revenue jumped 82% to $24.8 billion in the second quarter. As AI demand drives higher data-centre spending, investors are watching Alphabet stock and other tech stocks for stronger growth as well as the risks that come with rising costs.

Alphabet Raises 2026 Capex as AI Infrastructure Demand Accelerates

From $180B-$190B to $195B-$205B

Alphabet raised its 2026 capital expenditure forecast on July 22, 2026, to $195 billion-$205 billion, compared with its previous range of $180 billion-$190 billion. Reuters reported that the higher spending initially weighed on the stock as investors questioned whether the additional investment would generate enough returns.

Where the Money Is Going?

The additional spending is going toward data centres, servers, networking equipment and AI chips. Alphabet spent $44.9 billion on capital expenditure in Q2, roughly twice the amount recorded a year earlier. The company is also expanding its use of custom Tensor Processing Units, or TPUs, for AI workloads.

Google Cloud and Gemini Show Why Alphabet Is Spending More

Google Cloud Revenue Jumps 82%

Google Cloud revenue climbed 82% year over year to $24.8 billion in Q2 2026. Cloud operating income reached $8.8 billion, while its operating margin rose to 35.6%. The Cloud backlog also increased by more than $50 billion sequentially to $514 billion.

$GOOGL $339, -2% intraday.

Google put Koray Kavukcuoglu over DeepMind after saying Gemini reached 950M+ monthly users. Alphabet's Q2 release showed Cloud at $24.8B, +82% y/y.

The debate is execution, not demand.

Google Aug. 5 post / Alphabet Q2 release

— Deep Value Memetics (@DV_Memetics) August 20, 2026

Alphabet expects to recognise just over half of that backlog as revenue within the next 24 months. The strong Cloud numbers give the company more room to invest in additional AI capacity.

Gemini and AI Demand Strengthen the Investment Case

Alphabet is adding computing capacity for Gemini, AI Search and enterprise applications. Management said training had started on Gemini 4. The company also began recognising revenue from TPU system sales in Q2.

This gives Alphabet control across several parts of the AI business, from chips and cloud infrastructure to AI products. Investors will still want to see whether the investment can produce lasting returns.

Alphabet Stock Faces a New AI Spending Test

Strong Revenue vs Rising Costs

Alphabet reported Q2 revenue of $119.8 billion, a 24% increase from a year earlier. Advertising revenue reached $81.6 billion. Free cash flow, though, dropped to negative $5.9 billion, the first quarterly deficit since Alphabet went public.

The heavy AI investment is now using more cash. It is also expected to increase depreciation costs as Alphabet puts more data-centre infrastructure into operation.

Why Investors are Watching Alphabet Closely?

Investors are weighing the growth in AI revenue against the rising cost of building and running that infrastructure. Cloud growth, Gemini adoption, TPU sales, profit margins and future capex will all remain on the radar.

On August 19, Alphabet raised $3.9 billion through its first Australian-dollar bond. The financing adds another layer to the company’s large AI investment programme.

Tech Stocks to Watch as Alphabet Expands AI Spending

Nvidia and Semiconductor Suppliers

Alphabet’s higher spending also has implications for the wider AI hardware market. Nvidia remains a major stock to watch because hyperscalers need advanced computing hardware for AI workloads. Broadcom is another name investors are following because of its role in custom AI chips. Marvell also moved into focus on August 20 after announcing a Google partnership involving custom AI chips.

Amazon, Microsoft and Meta

Alphabet is not alone in increasing AI investment. Amazon has raised its 2026 capex outlook to about $220 billion. Microsoft and Meta are also spending heavily on AI infrastructure.

For investors, the focus is shifting beyond the size of these budgets. Spending efficiency, cloud demand, and the returns generated from AI infrastructure will matter just as much.

What Alphabet’s $205B Capex Plan Means for Investors?

Alphabet’s higher capex plan points to continued demand for AI infrastructure, but it also brings greater financial pressure. Strong Cloud growth supports the investment, while negative free cash flow shows the cost of that spending in the near term.

Meyka’s GOOGL forecast page shows a $381.70 monthly target, $446.22 quarterly target, and $290.39 yearly forecast, pointing to a wide range of expectations. Its technical snapshot has also shown bearish momentum. Investors should treat these forecasts as directional rather than guaranteed. An AI stock analysis tool can help compare technical signals, forecasts, and fundamental data when assessing Alphabet stock.

Conclusion: Alphabet’s AI Spending Raises the Stakes

Alphabet’s $195 billion-$205 billion 2026 capex plan shows how quickly AI infrastructure costs are growing. Strong Cloud growth supports the spending, but negative free cash flow adds pressure on the company. GOOGL remains a tech stock to watch as investors assess AI returns. Goldman Sachs reaffirmed its Strong Buy rating in August with a $435 target, giving investors a bullish view alongside the concerns about rising costs.

Disclaimer:

The content shared by Meyka AI PTY LTD is for research and informational purposes only. Meyka is not a financial advisory service, and the information provided should not be treated as investment or trading advice.