Alphabet Raises AI Stakes With $185 Billion Spending Plan
Google’s parent accelerates investment in data centers and computing power as revenue tops $400 billion and rivals face growing investor scrutiny over returns.
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[Image source: Chetan Jha/MITSMR India]
Alphabet is ramping up investments in artificial intelligence at an unprecedented scale, with plans to nearly double its capital expenditure this year to $175 billion-$185 billion, one of the largest such commitments in the tech industry.
The push comes as the Google parent reported annual revenue above $400 billion for the first time, helped by strong growth in search, cloud and AI-related services.
The company’s forecasted capital outlay for AI infrastructure, including data centers, servers and networking equipment, starkly outpaces Wall Street expectations of about $115 billion and reflects a belief that expanding compute capacity is essential to sustaining long-term growth.
CEO Sundar Pichai told analysts the increase was driven by supply constraints and the need to meet rising demand for AI computing power.
The aggressive capex plan arrives amid heightened investor scrutiny of Big Tech spending.
Last week, Microsoft Corp. signaled its own capital expenditure would exceed $140 billion, an increase that weighed on its shares as markets questioned the near-term return on such outlays.
By contrast, Meta saw its stock climb after projecting about $135 billion in capex, partly because it tied AI investment more clearly to ad efficiency and revenue gains.
Alphabet’s fourth-quarter and full-year results showed momentum across key segments. Search revenue rose about 17%, helped by deeper integration of AI into Google’s core products. The company said it shipped hundreds of AI-driven updates to search features, while daily AI-enabled queries have doubled since the rollout of new capabilities.
“Our full AI stack is fueling our progress,” Pichai said in a post on X, adding that Gemini 3 adoption has been faster than any model in Google’s history. He said the company is “really well positioned and excited going into 2026.”
Cloud computing emerged as a major growth driver, with Google Cloud revenue jumping nearly 48%in the latest quarter and its backlog swelling to roughly $240 billion, driven largely by enterprise demand for AI products and services.
Nearly 75% of Cloud customers are now using Google’s vertically optimised AI stack, spanning chips, models, and enterprise AI agents.
AI-based monetization appears to be gaining traction. Alphabet said revenue from generative AI-powered offerings grew sharply year-on-year, while adoption of its Gemini models has spread rapidly among enterprises. More than 8 million paid enterprise seats for Gemini have been sold in recent months, and the Gemini app counts hundreds of millions of monthly users.
At the infrastructure level, Alphabet is expanding both third-party GPU capacity and its proprietary Tensor Processing Units, and is pursuing strategic moves to bolster data center and energy infrastructure. The company also noted efficiency gains have helped lower some model serving costs, even as overall capex rises.
Consumer products are increasingly AI-native, with AI features spreading across Gmail, Chrome, Android and Pixel devices, and initiatives such as the Universal Commerce Protocol underscoring Google’s push into agent-style computing experiences. YouTube also marked a revenue milestone, surpassing $60 billion in annual ad and subscription sales, with AI tools reshaping creation and viewing behaviour on the platform.
