Alphabet just unveiled a massive spending plan—$195B to $205B by 2026—with nearly $45B spent in Q2 alone, even as free cash flow turned negative by $6B. Most of this investment isn’t hitting profits yet, thanks to depreciation: servers bought now will slash operating income by roughly half a quarter’s worth for six years, starting in 2027. But the growth is undeniable—revenue up 24%, Google Cloud revenue soaring 82% with operating income tripling. For now, growth is outpacing the cost, but with depreciation’s fixed schedule and cash flow under pressure, the real test begins in 2027.
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