BlockBeats News, July 22, Alphabet (GOOG/GOOGL) will hold its 2026 second-quarter earnings conference call on July 22 at 1:30 PM PT, 4:30 PM ET, corresponding to July 23 at 4:30 AM Beijing time. The earnings materials will be released prior to the call. Market focus will be on AI capital expenditure guidance, ROI, Google Cloud growth, search advertising performance, and changes in cloud business backlog.

From an institutional perspective, BofA (Bank of America) analyst Justin Post maintains a positive view on Alphabet, believing that Google Cloud and the search business remain key performance drivers this quarter. He expects strong growth in the cloud business and anticipates search advertising to benefit from commercial improvements following the integration of AI capabilities. However, Bank of America also cautions that rising hardware costs, such as memory, may drive up AI infrastructure budgets, potentially leading to a further increase in Alphabet's capital expenditure outlook for the year.

BMO (Bank of Montreal) is similarly optimistic and has raised Alphabet's target price ahead of the earnings report. The institution believes that data center expansion and backlog orders will continue to support Google Cloud growth, with ongoing demand for AI training and inference. However, BMO also mentions that the pace of Gemini product launches may bring some uncertainty, and investors will be watching to see if management can provide a clearer path to commercializing AI products.

HSBC's focus leans more towards costs. The institution believes the market needs to assess whether customers will shift to lower-cost AI models and if hardware price increases will continue to affect Alphabet's spending plans. The scale of AI investment is no longer the sole focus; investment efficiency, profit margin impact, and free cash flow pressure are equally important.

Not all outlooks are bullish on Alphabet. A post by finance professor and CTA Damir Tokic has caused a "quake" in the US stock investment circle, suggesting that Alphabet may be the first among large tech companies to lower its AI capital expenditure expectations. The pressure primarily arises from weakening free cash flow, rising financing costs, and the lack of sufficient proof of AI investment returns.

Tokic points out that Alphabet had previously raised its 2026 AI investment plan, with the market initially expecting the company to continue ramping up investments in data centers, servers, and cloud infrastructure. However, the high level of investment is squeezing cash flow, and if the company continues to maintain aggressive expansion, it may need to rely on debt or equity financing, thereby introducing credit risk and shareholder dilution pressure.

IG's outlook also highlights free cash flow risk. Previously, Alphabet's free cash flow was under pressure due to increased investment in AI and data centers, and the market will be watching to see if this trend continues. If Google Cloud continues strong growth, search advertising remains stable, and management does not further raise capital expenditure expectations, the stock price is more likely to find support. However, if the capital expenditure guidance continues to rise, investors may reevaluate future cash flow.

Overall, the key to Alphabet's earnings this time lies in whether management can demonstrate that AI spending is translating into revenue growth. Google has multiple assets such as the search portal, advertising system, cloud services, TPU, and Gemini model, but high capital expenditure has also increased the market's expectations for return on investment. If the upcoming earnings report fails to prove that AI investment is generating sufficient revenue, Alphabet's capital expenditure plan and stock price may both face repricing.