Alphabet Will Spend as Much as $205 Billion This Year. The Depreciation Bill Starts Landing in 2027.
The cash leaves now. The earnings hit arrives later, on a six-year schedule the company set itself.
Overview
When Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) reported second-quarter results last week, it raised its 2026 capital expenditure guidance to a range of $195 billion to $205 billion, up from $180 billion to $190 billion. The company spent $44.9 billion on capital expenditures in the second quarter alone, and free cash flow for the period ran negative $5.9 billion.
Most of the debate I've seen since the report is about the cash. How long can Alphabet spend at this pace, and what does it do to buybacks and the balance sheet?
Details
But the cash is only half of the accounting. Almost none of this year's spending has reached the income statement yet, because that's not how big equipment purchases work. The profit hit arrives later, on a schedule, as depreciation. And the schedule says the heaviest charges start landing in 2027.
Source
Originally published at www.fool.com.