Alphabet reported Q2 revenue of $119.8 billion on local time May 22, a 24% increase from the prior year, and raised its fiscal year 2026 capital expenditure guidance to $195-205 billion to support AI infrastructure expansion. The announcement triggered a 4.40% surge in the KOSPI index on May 23, with Samsung Electronics and SK Hynix gaining 3.65% and 4.86% respectively. Alphabet CFO Anat Ashkenazi stated the increased spending addresses rising AI demand and that capital expenditure will continue to expand significantly into next year. The guidance increase alleviated investor concerns that Big Tech firms might reduce AI infrastructure investment, which had previously weighed on Korean semiconductor stocks.
Alphabet Reports Q2 Revenue of $119.8 Billion
Alphabet disclosed Q2 revenue of $119.8 billion (approximately ₩177 trillion), exceeding the London Stock Exchange Group (LSEG) market estimate of $116.9 billion. Q2 capital expenditure reached $44.9 billion (approximately ₩66.3 trillion), closely matching the StreetAccount market estimate of $44.8 billion. Alphabet's capital expenditure has risen steadily from $22-24 billion in Q2-Q3 of the prior year, to $28 billion in Q4, and $36 billion in Q1 of the current year.
Alphabet Raises FY2026 Capex Guidance to $195-205 Billion
CFO Anat Ashkenazi announced during the conference call that Alphabet raised its fiscal year 2026 total capital expenditure guidance from $180-190 billion to $195-205 billion (₩286.7-301.4 trillion). Excluding Q1 (₩52.4 trillion) and Q2 (₩65.9 trillion) spending, the company plans to allocate up to ₩182.6 trillion in the second half of the year. Ashkenazi stated the increase responds to growing AI demand and that capital expenditure will expand significantly into next year.
Samsung Electronics and SK Hynix Surge on KOSPI
Following Alphabet's earnings release, major Korean semiconductor stocks rose sharply on May 23. Samsung Electronics closed at ₩270,000, up 3.65%, while SK Hynix closed at ₩1,919,000, up 4.86%. The KOSPI index closed at 7,096.89, up 299.19 points or 4.40% from the previous trading day. Samsung Electronics and SK Hynix had underperformed due to concerns that Big Tech firms might reduce AI infrastructure investment, which would dampen semiconductor demand. The announcement improved weakened investor sentiment.
Analysts Confirm AI Investment Cycle Remains Strong
Kim Young-gun, a researcher at Mirae Asset Securities, stated, "Big Tech capital expenditure is the means to convert order backlogs into revenue, and as long as backlogs remain solid, continued infrastructure investment is unavoidable. Alphabet has indicated the possibility of meaningful capital expenditure increases into 2027, even from a base that already doubled year-over-year." Kim added, "Future capital expenditure from Microsoft, Amazon, and others will also show an upward trend." Kim Jung-han, a researcher at Samsung Securities, stated, "Market concerns about AI cycle and capital expenditure slowdown were unfounded, proven once again, and the enterprise momentum, still in its early stages, will strengthen further in the second half."
FAQ
What did Alphabet announce on local time May 22?
Alphabet announced Q2 revenue of $119.8 billion, a 24% year-over-year increase, and raised its fiscal year 2026 capital expenditure guidance from $180-190 billion to $195-205 billion to support AI infrastructure expansion.
Why did Samsung Electronics and SK Hynix stocks rise on May 23?
Samsung Electronics and SK Hynix stocks rose 3.65% and 4.86% respectively after Alphabet's increased capital expenditure guidance alleviated investor concerns that Big Tech firms might reduce AI infrastructure investment, which would dampen semiconductor demand.
How much will Alphabet spend on capital expenditure in the second half of the year?
Excluding Q1 and Q2 spending, Alphabet plans to allocate up to ₩182.6 trillion in capital expenditure during the second half of the year, according to CFO Anat Ashkenazi.
