Alphabet's stake in AI startup Anthropic has surged to a value of around $124 billion, according to a recent filing. Despite core businesses meeting estimates, the company's stock fell 7.5% after it raised its capital expenditure outlook. Analysts are divided, with JPMorgan advising to "buy the dip" while lowering its price target, and UBS expressing concern over rising costs and favoring Amazon.
Alphabet quarterly earnings performance
- ▪Following its Q2 earnings report, Alphabet's stock fell 7.5%
- ▪Alphabet's search, YouTube, and advertising businesses performed in line with or better than expectations in the second quarter
- ▪The $124.3 billion valuation of Alphabet's private company investments is primarily driven by its stake in AI startup Anthropic
- ▪In a filing on July 23, 2026, Alphabet disclosed its investments in private companies totaled roughly $124.3 billion as of June 30, 2026
Capital expenditure outlook increases
- ▪Alphabet increased its capital expenditure outlook for the year and expects spending to remain elevated in the next year
- ▪UBS analysts expressed concern that continually higher capital spending by Alphabet could weigh on its earnings growth
AI monetization challenges
- ▪Alphabet's AI platform, Gemini enterprise, is used by approximately 90% of Fortune 500 companies
- ▪Oppenheimer analysts noted Alphabet is experiencing a near-term margin drag due to high capital expenditures and undermonetized business areas
- ▪Oppenheimer analysts believe undermonetized areas like AI queries represent a future margin opportunity for Alphabet
Analyst price target adjustments
- ▪UBS analysts now favor Amazon over Alphabet due to a higher likelihood of a downward EPS revision for Alphabet
- ▪JPMorgan maintained its "overweight" rating on Alphabet's stock but lowered its price target to $420 from $460
- ▪JPMorgan analysts advised clients to "buy the dip" in Alphabet's stock
Cloud business growth momentum
- ▪JPMorgan analysts reported growth across Alphabet's cloud and search businesses during the recent quarter
- ▪Alphabet's cloud business performed roughly in line with Wall Street estimates in the second quarter
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