GOOGL stock fell sharply after Alphabet reported strong second-quarter revenue, while investors focused on rising AI spending, negative free cash flow, and a newly disclosed SpaceX stake.
Alphabet Reveals $94.1B SpaceX Stake
Alphabet said Google’s equity holdings include $94.1 billion in SpaceX shares following the space company’s June public listing. The disclosure appeared in Alphabet’s quarterly filing and gave investors the clearest official mark of Google’s long-held SpaceX investment.
The filing showed that $80 billion of the SpaceX holding remains under “short-term sale restrictions.” Another $14.1 billion is under longer lockup restrictions through the third quarter of 2027.
SpaceX went public on June 12, pricing shares at $135 and reaching an initial valuation of about $1.77 trillion. Alphabet’s filing marked the first time the company valued its SpaceX equity against public market prices after the listing.
Google first invested in SpaceX in 2015 through a funding round with Fidelity. The investment supported satellite internet infrastructure, while SpaceX later expanded through Starlink, Starship, and AI-related infrastructure.
GOOGL Stock Drops Despite Revenue Beat
Alphabet shares came under pressure after the company reported second-quarter results. GOOGL stock fell about 7%, while GOOG also dropped more than 6% during intraday trading.
The selloff came even as Alphabet posted $119.8 billion in revenue, up 24% from a year earlier. The result topped market expectations and reflected growth across Search, YouTube, and Google Cloud.
Source: CoinCodex
Google Cloud delivered the strongest growth among Alphabet’s main businesses. Cloud revenue surged 82% to $24.8 billion, while cloud operating income rose to $8.8 billion for the quarter.
YouTube advertising revenue increased 13% to $11.06 billion. Search also remained a core revenue driver, helped by broader use of AI features across Google products.
Alphabet’s reported results also reflected gains from equity securities, including its SpaceX position. However, investors focused more closely on spending, cash flow, and the cost of scaling AI infrastructure.
AI Spending Raises Investor Concern
Alphabet raised its full-year 2026 capital expenditure guidance to $195 billion to $205 billion. The new range showed how quickly the company is expanding data centers, AI chips, and computing capacity.
The company recorded about $45 billion in quarterly infrastructure spending. That heavy outlay pushed free cash flow to negative $5.9 billion, marking Alphabet’s first negative free cash flow quarter since tracking began in 2003.
Management also pointed to near-term margin pressure as Alphabet leases third-party servers to meet AI computing demand. The company has also used external compute capacity while internal data centers remain under construction.
Source: X
Alphabet’s AI spending comes as demand for enterprise AI services continues to grow. Google Cloud’s strong sales and backlog suggest customers are still seeking more computing power, security tools, and AI infrastructure.
The company is also developing next-generation silicon. Reports indicate Google is working on Frozen v2, a specialized AI server chip designed to hardcode Gemini models into silicon and improve efficiency over standard TPUs.
Alphabet’s SpaceX holding adds another major asset to its balance sheet after the IPO. However, the lockup schedule means Google cannot freely sell most of the position in the near term.
