I think #3 best describes as the Capex has to be taken from the growth elsewhere and the Capex is essential even to maintain their position vis a vis others. But greater Capex needed to be the leader. The market has become such that they cannot fall back on Capex now.
Alphabet Drops 6.9% Post-Earnings: Does $200B Capex Spook the Market?
Alphabet fell 6.89% after guiding 2026 capital expenditure toward approximately $200 billion, stoking fears that AI investment will erode profitability. Despite solid Cloud and Search results — and recent buying by Buffett — the repricing of "heavy capex, slow returns" wiped more than $700 billion from Mag-7 market caps in a single session. Investors are reassessing the valuation anchor for mega-cap tech. As the AI arms race becomes a test of spending endurance, can Alphabet's moat absorb the bill?
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