Alphabet’s Week in Review: 5.3% Drop as New Data Center Deals Announced

Alphabet (NASDAQ:GOOG) dropped 5.29% this week, closing at $306.02 on Friday. That’s a sharper decline than the broader market: the S&P 500 fell 1.29%, while the Nasdaq-100 dropped 1.27%. Year to date, Alphabet is down 2.48%, underperforming both indexes. ‘Misery’ loves company for the Magnificent 7, with every single Mag 7 stock now in negative territory year-to-date.

Three distinct storylines drove the week’s action, and they tell competing stories about where this company is headed.

The CapEx Elephant in the Data Center

Alphabet’s $175-185 billion CapEx guidance for 2026 sent shockwaves through the market. That’s infrastructure spending is on a scale few companies can match, aimed squarely at AI buildout and cloud expansion. The stock fell 7% post-Q4 earnings on February 5th as investors digested what this means for near-term profitability.

To fund the expansion, Alphabet issued $20 billion in multi-tranche bonds on February 10, including a rare 100-year sterling bond worth £1 billion. The bond sale itself knocked the stock down another 2.1%. Zacks Research maintains a Hold rating, flagging overvaluation concerns despite strong fundamentals.

Reddit sentiment reflected the confusion: one highly engaged post asked, “People selling GOOG due to massive capex, what’s your thesis? I see it as bullish” with 403 upvotes and 170 comments.

Regulatory Wins and Headwinds Collide

On February 12, EU regulators approved Alphabet’s $32 billion acquisition of Wiz, clearing a major antitrust hurdle. That news briefly lifted the stock, but regulatory pressure elsewhere continues mounting. The European Publishers Council filed an antitrust complaint over Google’s AI Overviews, alleging the company uses publisher content without fair compensation. Meanwhile, the UK’s Competition and Markets Authority forced Google and Apple to commit to app store changes, including non-discrimination policies and transparent ranking systems.

AI Infrastructure Expansion Accelerates

Alphabet announced Project Mica on February 12, a $10 billion data center campus in Kansas City’s Northland requiring up to 500 megawatts of power. The company also locked in a 15-year, 1 GW solar capacity agreement with TotalEnergies for Texas data centers, representing 28 TWh of renewable energy. Google increased its stake in TeraWulf to 14%, funding the Lake Mariner data center expansion as TeraWulf pivots from bitcoin mining to AI infrastructure.

This week crystallized the tension investors face: Alphabet is spending like the future depends on it, because it does. The question is whether you believe $175-185 billion in CapEx will generate returns that justify today’s 29x trailing earnings multiple, or whether the company is simply lighting cash on fire to keep pace with Microsoft and Amazon. The market’s answer this week was a 5% haircut.

My personal opinion is that the selling in the Magnificent 7 this year is becoming exaggerated, but if you’re looking for deals amongst the Mag 7, Amazon might be an even more compelling value at today’s prices.