Google still gets the VAST majority of their revenue from search. And they haven't done a whole lot of innovating in the search space since their initial success and are very busy trying to become dominate in every area, including social. They're probably the most premier example of a company having delusions of grandeur.
Perhaps true, but short of redefining everything about capital markets, and human nature, I don't see how their actions are anything other than rational.
When you have vast amounts of cash, and a dominant market position, you're probably obligated to make large bets to expand into complementary markets, just by fiduciary duty and especially now because of the low cost of capital (i.e. interest rates) - the alternatives available to your investors are very low return, meaning a low bar to investing money on company expansion.
Also for every company with "delusions of grandeur" there's another company who took the safe, conservative route you seem to be suggesting, only to watch their dominant position disappear because of market or technology shifts. Which is another reason why its sound management to reinvest your profits to try and expand.
