Alphabet (GOOGL) stock has gained 21% over the past year but remains 22% below its May high following a significant shift in capital allocation. The company is financing its AI infrastructure buildout through new equity issuance and a substantially larger capital expenditure budget, resulting in free cash flow turning negative for the first time since the company went public. Second-quarter financial results highlighted strong top-line growth with revenue rising 24% to $119.8 billion and Google Cloud revenue accelerating to an 82% increase. However, this expansion came at a steep cost, as Alphabet raised its 2026 capital expenditure guidance to between $195 billion and $205 billion, more than double the previous year's spending of $91.5 billion. Analysts expect third-quarter revenue near $128 billion and are closely watching whether Cloud growth can justify the aggressive spending bill projected for 2027, which is currently estimated at around negative $37 billion in free cash flow. While the stock trades at a forward P/E of roughly 23x, right at its five-year average, investors face uncertainty regarding when free cash flow will turn positive again, with some estimates pointing to 2028. Despite the bearish sentiment driven by heavy spending and negative cash flow, Wall Street maintains a normalized EPS growth expectation of approximately 24% annually through 2028. The stock's valuation is considered fair relative to its earnings growth rate, though the deep problem remains liquidity constraints as analysts do not expect free cash flow to return to positive territory until 2028.