Alphabet Slumps as Unrealized Gains Distort Earnings Report
Alphabet's quarterly earnings report revealed a $77.1 billion unrealized gain on equity securities, which accounted for about 64% of its quarterly revenue.
The company's share price slipped to $337.16 after investors scrutinized the numbers and noted that this kind of profit is not sustainable in the long term.
On the other hand, Alphabet's actual business performance was impressive: quarterly revenue surged 24% to $119.8 billion, with Google Cloud growth reaching an astonishing 82% to $24.8 billion.
The company's backlog also ballooned to $514 billion, and in response, Alphabet is pouring massive amounts of cash into data centers, chips, and computing capacity, pushing expected 2026 capital expenditures to a staggering $195 billion-$205 billion.
This significant investment reflects management's confidence that demand for its AI technology will continue to soar.