Alphabet Shares Fall as Filing Discloses $94.1 Billion SpaceX Stake
Key Takeaways
- •Alphabet reported $119.8 billion in second-quarter revenue, representing 24% year-over-year growth and beating market expectations across Search, YouTube, and Google Cloud.
- •GOOGL shares fell approximately 7% as investors focused on heavy AI infrastructure spending that pushed free cash flow to negative $5.9 billion, the first negative quarter since 2003.
- •Alphabet disclosed a $94.1 billion SpaceX equity holding in its quarterly filing, with $80 billion under short-term sale restrictions and $14.1 billion locked up through the third quarter of 2027.
- •Google Cloud revenue surged 82% to $24.8 billion with operating income of $8.8 billion, marking the strongest growth among Alphabet's main business segments.
- •Alphabet raised its full-year 2026 capital expenditure guidance to a range of $195 billion to $205 billion to fund data center expansion, AI chips, and computing capacity.
Alphabet shares fell sharply after the Google parent reported strong second-quarter revenue, as investors focused on higher AI-related spending, negative free cash flow, and a newly disclosed stake in SpaceX. The sell-off reflected broader market sensitivity to the cost of AI infrastructure buildouts across the largest technology companies, several of which have significantly increased capital expenditure forecasts in 2025 and 2026.
Alphabet Discloses $94.1 Billion SpaceX Holding
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 provided investors with the clearest official valuation yet of Google's long-held investment in SpaceX.
According to the filing, $80 billion of the SpaceX position remains subject to "short-term sale restrictions." A further $14.1 billion is under longer lockup restrictions that run 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 measured its SpaceX equity against public market prices after the listing.
Google first invested in SpaceX in 2015 through a funding round alongside Fidelity. The investment supported satellite internet infrastructure, while SpaceX later expanded through Starlink, Starship, and AI-related infrastructure. The disclosure adds a substantial non-operating asset to Alphabet's balance sheet, though the lockup restrictions mean the position will not be fully liquid for over two years.
GOOGL Drops Despite Revenue Beat
Alphabet shares came under pressure after the company released its second-quarter results. GOOGL stock fell about 7%, while GOOG declined more than 6% during intraday trading.
The decline came even though Alphabet reported $119.8 billion in revenue, up 24% from a year earlier. The result exceeded market expectations and reflected growth across Search, YouTube, and Google Cloud.
Source: CoinCodex
Google Cloud posted the strongest growth among Alphabet's main businesses. Cloud revenue rose 82% to $24.8 billion, while cloud operating income increased to $8.8 billion for the quarter. The cloud segment's growth rate stands out in a market where Google competes with Amazon Web Services and Microsoft Azure, both of which have also reported sustained demand for AI-related cloud services.
YouTube advertising revenue climbed 13% to $11.06 billion. Search also remained a core revenue driver, supported by broader use of AI features across Google products.
Alphabet's results also included gains from equity securities, including its SpaceX position. However, investors focused more closely on spending levels, cash flow, and the cost of scaling AI infrastructure.
AI Spending Draws Scrutiny
Alphabet raised its full-year 2026 capital expenditure guidance to a range of $195 billion to $205 billion. The updated forecast showed the pace at which the company is expanding data centers, AI chips, and computing capacity. That level of spending places Alphabet alongside Amazon, Microsoft, and Meta as the largest infrastructure investors in the technology sector.
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 quarter of negative free cash flow since tracking began in 2003.
Management also cited near-term margin pressure as Alphabet leases third-party servers to meet AI computing demand. The company has been using external compute capacity while its 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 indicate customers are still seeking additional 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 compared with 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.
