TLDR
- Alphabet stock climbed 2.6% in morning trading to $328.06, recovering from a 7% drop after Q2 earnings last Thursday
- Google Cloud revenue surged 82% year over year in Q2, with operating income up more than 200%
- The post-earnings selloff was driven by raised 2026 capex guidance of $195B–$205B and the company’s first-ever negative quarterly free cash flow
- Q2 revenue hit $119.8 billion with EPS of $9.11, both beating analyst expectations
- Analyst consensus remains a “Buy” with an average price target of $410.09, well above current levels
Alphabet stock climbed 2.6% Monday morning to $328.06, staging a partial recovery after its worst single-day drop in over a year. Last Thursday, the stock fell more than 7% following its Q2 2026 earnings release.
The selloff was tied to two things: Alphabet raised its 2026 capital expenditure guidance to $195 billion–$205 billion, up from $180 billion–$190 billion, and reported its first-ever negative quarterly free cash flow since its 2004 IPO.
Those two data points rattled investors, even though the underlying earnings were strong.
Q2 revenue came in at $119.8 billion, up 24.2% year over year and ahead of the $116.53 billion analysts had expected. EPS landed at $9.11, crushing the consensus estimate of $2.87.
Google Cloud was the standout. Revenue in the segment surged 82% year over year, far above Wall Street expectations, and operating income jumped more than 200% compared to the same period last year.
On the earnings call, CFO Anat Ashkenazi said demand for AI infrastructure is still outpacing the company’s ability to invest. Analysts took that as a sign that the spending is tied to real, revenue-generating demand.
A $1 billion cloud deal signed by Verizon with Google added some credibility to that view.
Analyst Support Holds Firm
Despite some price target cuts, Wall Street’s overall stance on Alphabet didn’t change much after earnings. Six analysts rate it Strong Buy, thirty rate it Buy, and three have it at Hold.
BMO Capital Markets actually raised its target from $455 to $465, keeping an “outperform” rating. Wedbush initiated coverage with an “outperform” and a $445 target. DZ Bank upgraded to “strong buy.” DA Davidson trimmed its target from $375 to $350 and kept a “neutral” rating.
The consensus price target now sits at $410.09, well above Monday’s trading price.
Keebeck Wealth Management increased its Alphabet position by 59.4% in Q1, ending the quarter with 17,781 shares worth about $5.1 million. Institutional investors collectively own 27.26% of the stock.
Macro Backdrop Helps
Monday’s broader market environment also helped. Brent crude fell sharply after the U.S. and Iran paused military strikes and began diplomatic talks, easing some energy supply pressure.
The Dow traded higher on the news, giving markets a risk-on feel. The Nasdaq stayed under modest pressure, though, with investors still cautious heading into a busy week.
The Federal Reserve’s rate decision is due July 29, the same day Meta reports Q2 earnings.
Alphabet’s stock remains well below its 52-week high of $404.47. The stock opened Monday at $319.09, with a 52-week low of $188.70.
The company also announced a quarterly dividend of $0.22 per share, payable September 14 to shareholders of record on September 7.
Alphabet also received an EU antitrust fine of around $1 billion, adding to existing regulatory pressures.
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