Alphabet shares plunged more than 7% on Thursday, their worst day in over a year, after the company raised its capital expenditures for 2026 to as much as $205 billion and reported that free cash flow turned negative in the second quarter for the first time since its 2004 IPO. Despite an 82% increase in Google cloud revenue, far surpassing Wall Street estimates, investors are now focused on capital spending, marking a break from their previous tolerance. The Mag Seven index fell 4.8% Thursday, and Alphabet, Microsoft, Amazon and Meta are collectively projected to spend $724 billion in capital this year, then nearly $950 billion in 2027. The SOX index has had 17 moves of 5% or more this year, matching the 2008 record, with volatility at its highest since 2020. Apple, which avoided big AI outlays, surged 15% in July, contributing the most to the S&P 500’s 8.3% rise this year.
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