Google parent Alphabet says its capital spending could double to $235 billion amid AI race
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CEO Sundar Pichai said Alphabet is seeing AI investments and infrastructure drive revenue and growth across the board.
PHOTO: REUTERS
New York – Alphabet said on Feb 4 that capital expenditure could nearly double in 2026, in yet another aggressive spending ramp-up by the Google parent as it deepens investments to push ahead in the artificial intelligence (AI) race.
Alphabet shares were volatile in after-hours trading, falling 6 per cent before recouping losses, as investors weighed the swell in spending against surging revenue and profit, both of which beat expectations in the December quarter.
The company said it was targeting capital expenditure of between US$175 billion and US$185 billion (S$235 billion) in 2026, a massive jump compared with analysts’ average expectations that it would spend about US$115.26 billion, according to data compiled by LSEG.
Chief executive Sundar Pichai said in a statement that Alphabet hiked its forecast spending “to meet customer demand and capitalise on the growing opportunities we have ahead of us”.
“We are seeing our AI investments and infrastructure drive revenue and growth across the board,” he added.
The company spent US$91.45 billion in 2025, primarily on AI infrastructure, including servers, data centres and networking equipment. That compares with its projections for total spending of between US$91 billion and US$93 billion in 2025.
Growth in Google’s cloud division, where the company is enjoying early returns on AI investment, helped its stock pare losses. The unit’s revenue grew 48 per cent to US$17.7 billion in the fourth quarter ended December, compared with analysts’ average estimate of a 35.2 per cent jump, according to data compiled by LSEG.
“Google Cloud growth was far ahead of expectations and, importantly, higher growth than Microsoft Azure for the first time in several years,” said Mr Gil Luria, an analyst at DA Davidson. “The acceleration in Google Cloud seems to justify the increased investment.”
The company reported total revenue of US$113.83 billion for the quarter, beating analyst estimates of US$111.43 billion, according to LSEG data. Adjusted profit per share of US$2.82 also beat estimates of US$2.63.
Cloud computing majors have poured hundreds of billions of US dollars into expanding their AI infrastructure, both to meet the growing enterprise demand for their cloud services and to fuel their own development of AI technologies and products.
Like larger rivals Amazon Web Services and Microsoft’s Azure, Google Cloud has been grappling with capacity constraints that have dented its ability to fully cash in on AI demand from its customers.
Along with Meta, the big cloud companies are expected to collectively shell out more than US$500 billion on AI in 2026. Meta last week hiked capital investment for AI development in 2026 by 73 per cent, targeting spending between US$115 billion and US$135 billion, while Microsoft also reported record quarterly capital expenditure.
The aggressive expansion in outlay comes at a time when investors have grown increasingly concerned about payoffs from AI investments. But Google has shown strong progress in its AI efforts.
The launch of its latest Gemini 3 model in November
Google’s Gemini AI assistant app exceeded 750 million users a month, Mr Pichai said, up by 100 million compared with November.
In January, Google struck a deal to power Apple’s revamped Siri voice assistant with its Gemini models, a partnership that unlocks a huge market for Google, with Apple’s installed base of more than 2.5 billion devices. REUTERS
