Google Cloud grew 82%. Why the stock still fell after hours.

GOOGL just delivered one of the strongest quarters of the AI cycle. The stock fell after hours anyway. The reason sits in the spending, not the results: management raised 2026 CapEx guidance to $200 billion and the quarter ran free cash flow negative. Chief Market Strategist Shay Boloor breaks down why the print was stronger than the after hours reaction suggested. The print: • Revenue grew 24% to nearly $120 billion • Google Cloud grew 82% to a $25 billion business, beating estimates by roughly $2.5 billion • Cloud operating income tripled to $8.8 billion; operating margin expanded from 21% to 36% • Search grew 17% to more than $63 billion • YouTube ad revenue grew 13% to $11 billion • Google Cloud backlog reached $514 billion • Gemini app hit ~950 million monthly users; AI mode surpassed 1 billion monthly users • Gemini is processing ~22 billion API tokens per minute, up from 16 billion last quarter • 2026 CapEx guidance raised to $200 billion from $185 billion • Free cash flow turned negative: $39 billion operating cash flow against $45 billion of CapEx The debate coming out of this quarter is no longer whether Google's AI strategy is working. It clearly is. Cloud is compounding at 82% with 36% operating margins, the backlog sits north of half a trillion dollars, and Gemini is scaling across search, Workspace, and enterprise. The market's hesitation is about the cost of keeping up: raised CapEx, more expensive third-party capacity to bridge demand, and a rare negative free cash flow quarter. Boloor reads the weakness as a reaction to the size and timing of the spending cycle, not a crack in the underlying business. About FE Earnings Edge: FE Earnings Edge is Futurum Equities' rapid-reaction earnings series with Chief Market Strategist Shay Boloor (@StockSavvyShay), breaking down the prints that move the AI, semiconductor, space, energy, security, and robotics names the firm covers. Disclaimer: This content is for informational and educational purposes only and should not be considered financial advice. Always do your own research.