Alphabet Jumps 5.1% as Morgan Stanley Backs $195 Billion-$205 Billion AI Spending
Updated
Updated · Yahoo Finance · Aug 3
Alphabet Jumps 5.1% as Morgan Stanley Backs $195 Billion-$205 Billion AI Spending
1 articles · Updated · Yahoo Finance · Aug 3
Summary
Alphabet shares rose 5.1% by 12:55 p.m. ET Monday after Morgan Stanley told investors the company’s heavy AI infrastructure spending remains manageable.
Morgan Stanley argued Alphabet’s raised 2026 capital-spending plan of $195 billion to $205 billion fits a broader hyperscaler buildout, with Amazon at $220 billion, Microsoft near $190 billion and Meta at $130 billion to $145 billion.
Google’s case rests on growth and funding: Morgan Stanley cited Google Cloud Platform revenue growth of 82% year over year and said operating cash flow, financing, leasing and custom chips are easing free-cash-flow pressure.
The rebound followed a post-earnings selloff even after Alphabet reported $9.11 a share in second-quarter profit, about triple analyst expectations, as investors initially focused on the higher AI spending outlook.
Morgan Stanley still sees risk further out, noting AI investment could push Alphabet into free-cash-flow losses next year even though it generated $53.3 billion in positive free cash flow over the past 12 months.