Jim Cramer Was Left “Shocked” By Alphabet Inc. (NASDAQ:GOOGL)’s Shares

Ramish Cheema

Fri, July 31, 2026 at 7:40 PM PDT 4 min read

Alphabet Inc. (NASDAQ:GOOGL)'s shares are up by 6.8% year-to-date and by 71% over the past year. More recently, the shares are down by 5.7% over the past month. On July 23rd, the stock closed 7% lower after the firm had reported its second-quarter earnings on the 22nd after market close. The results saw Alphabet Inc. (NASDAQ:GOOGL) post $119.80 billion in revenue and $2.85 in adjusted earnings per share to beat analyst revenue estimates of $116.93 billion and miss the earnings estimates of $2.89. Additionally, the firm also upped its 2026 capital expenditure estimate of $195 billion from $205 billion from the earlier estimate of $180 billion to $190 billion. Alphabet Inc. (NASDAQ:GOOGL)'s free cash flow during the quarter sat at a negative $5.9 billion, which was the first negative reading since its IPO in 2004. Cramer discussed the figures in the broader context of the sentiment surrounding AI and capital expenditure:

"But, what I was most shocked by was what happened, and I think, [inaudible] with Alphabet. Last week, Alphabet, unraveled the entire trade. I mean this is, Alphabet, you know look at NVIDIA, was up three and a half when I woke up. And again, it's all about, how if you spend, your stock is in the penalty box. And, Alphabet spend, you know the loss of market cap, 255 billion because of a raise of a 180 to a 190 spend, to a 195 to 205? David, you got a clear head on this, you know, that there's 17 times the incremental of [inaudible] billion they lost? Which basically just said, guys, we don't believe anymore, there's no ROI, or, if you just spend a lot, we're not interested in you.

"Google Cloud is doing great. Just great. So you have to say, well that works. But the other side, the actual compute, that you're selling say to others, or that you're using, we haven't figured out the return on that yet, David. Or whether there will be a return. Which is if there's not a return, I'm sorry, I'm not going to buy this stock. I'm going to find something else that works in tech."

Photo by Kai Wenzel on Unsplash

The negative free cash flow is at the heart of the debate surrounding Alphabet Inc. (NASDAQ:GOOGL). For the bears, it indicates that depreciation charges on these investments can further constrain the finances as returns for AI remain unclear. However, the bulls believe that Alphabet Inc. (NASDAQ:GOOGL)'s heavy spending is being translated into growth. They point towards the firm's Google Cloud business, whose revenue surged by 82% annually to sit at $24.8 billion in the latest quarter.