Alphabet's shares fell more than 3% following its second-quarter earnings report, despite exceeding revenue and earnings expectations. The company reported a 14% year-over-year revenue increase to $84.7 billion, driven by a 30% surge in Google Cloud revenue to $10.3 billion, marking a significant milestone. However, rising capital expenditures of $13 billion and slower growth in YouTube ad revenue at 13%, compared to 21% in the previous quarter, have raised concerns among investors about profitability amid intense competition. Analysts noted that Alphabet's heavy investments in AI infrastructure might further pressure margins, especially as it navigates a competitive landscape with players like Amazon and Microsoft. While some brokerages raised their price targets for Alphabet, the outlook appears cautious due to the potential for decelerating growth in its core advertising business. The company is focusing on moderating expenses and reallocating resources towards key AI initiatives to maintain its market position.