Alphabet doubles down with $185 billion AI spending plan as cloud revenue surges 48%

Alphabet to Blow Past Investor Expectations for AI Spending

The company has quickly improved its Gemini model and integrated it throughout its products -- an effort that has required massive investment in data centers and chips for model improvement and cloud customers. Alphabet Inc. topped projections for quarterly revenue and outlined an ambitious capital spending plan, far surpassing predictions, leveraging its growth to build out the data centers and infrastructure needed to lead in the AI age. The Google parent said capital expenditures would reach as much as $185 billion this year, compared with the $119.5 billion analysts expected. The company's fourth-quarter sales, excluding partner payouts, were $97.23 billion, surpassing the $95.2 billion expected on average by analysts, according to data compiled by Bloomberg. Chief Executive Officer Sundar Pichai said the investments are paying off. "We're seeing our AI investments and infrastructure drive revenue and growth across the board," he said Wednesday in a statementBloomberg Terminal. "Search saw more usage than ever before, with AI continuing to drive an expansionary moment." Google Cloud revenue was $17.7 billion, beating the $16.2 billion analysts expected. The shares fell more than 7.5% in after-market trading before recovering. Google has raced to reinvent its business for the AI age, working to keep consumers in the habit of going to its search page even when they could also go to chatbots from rivals like OpenAI. The company has quickly improved its Gemini model and integrated it throughout its products -- an effort that has required massive investment in data centers and chips for model improvement and cloud customers. The industry has leaned on Google's progress. Google is supplying up to one million of its specialized AI chips to Anthropic, cementing Google's position as a key infrastructure provider in the AI space. Gemini will also be a provider of AI for Siri on Apple Inc.'s iPhones. The Gemini app has 750 million monthly active users. To justify its heavy spending, Alphabet needs to demonstrate momentum in its cloud and search advertising businesses. The company has said its massive investments in AI -- funding new infrastructure, research and talent -- are essential for competing against rivals including Amazon.com Inc., Microsoft Corp. and OpenAI.

Google looks to plow approx $180B into datacenters this year

With revenue topping $400B for the first time, the Chocolate Factory is at no risk of putting itself in the poor house Google's parent Alphabet is doubling down on generative AI in 2026. On Wednesday's earnings call, the search and advertising giant boosted its full-year capital expenditures target to between $175 and $185 billion, roughly twice what it spent last year. The search and ads giant will use that massive pile of cash to build datacenters and buy the kit to fill them, to support its own products and the infrastructure needs of partners like Apple, OpenAI, and Anthropic. Speaking during Alphabet's earnings call, CFO Anat Ashkenazi said roughly 60 percent of the company's 2026 capex spend, or about $105 to $111 billion, will go toward fast-depreciating assets like servers. The remaining 40 percent, or $70 to $74 billion, will support the construction and networking of new datacenter facilities. Much of the server spend will go toward the deployment of AI infrastructure, which includes both Google's own in-house tensor processing units (TPUs) and Nvidia GPUs. Ashkenazi said investment in compute infrastructure will split evenly between internal workloads and the Google Cloud platform. Spending all that money won't be easy. On the company's earnings call, analysts asked CEO Sundar Pichai what keeps him up at night. He replied that scaling compute capacity while managing the power, land, and supply chain constraints necessary to meet demand for AI services remains a persistent concern for the company. Just like Meta, Alphabet isn't just shoehorning generative AI into every user-facing product it can. The company is also using the models to enhance its online ad businesses. According to Philipp Schindler, Google's chief business officer, Gemini has helped improve the relevance of the ads it delivers alongside results from Google searches. "Gemini's understanding of intent has increased our ability to deliver ads on longer, more complex searches that were previously challenging to monetize," he said. "Gemini models also have a significant impact on core understanding in non-English languages, expanding opportunities for businesses to scale." Alphabet's ad revenues across Google's Search, YouTube, and Network segments topped $82.28 billion during the quarter, an increase of more than 13 percent from this time last year. Google's Cloud Platform (GCP) also ended the 2025 fiscal year on a high note. Q4 cloud revenues jumped 47 percent year-over-year, to reach $17.66 billion. Strong demand for both AI and enterprise compute drove the growth. "GCP's performance was driven by accelerating growth in enterprise AI products, which are generating billions in quarterly revenues," Ashkenazi said, adding that the cloud's core services, including things like cybersecurity and data analytics services, also experienced heavy revenue gains during the quarter. Put together, Alphabet raked in $34.45 billion in profits in Q4 on revenues of $113.82 billion. For the full year, meanwhile, revenues topped $402.84 billion of which Alphabet counted $132.17 billion in profits. ®

Google parent Alphabet says it could double capital spending in 2026

Feb 4 (Reuters) - Alphabet (GOOGL.O), opens new tab said on Wednesday that capital expenditure could as much as double this year, in yet another aggressive spending ramp-up by the Google parent as it deepens investments to push ahead in the AI race. Alphabet shares were volatile in after-hours trading - falling 6% 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 $175 billion to $185 billion this year, a massive jump compared with average analyst expectations that it would spend about $115.26 billion this year, according to data compiled by LSEG. CEO Sundar Pichai said in a release that Alphabet hiked its forecast spending "to meet customer demand and capitalize on the growing opportunities we have ahead of us." He added: "We're seeing our AI investments and infrastructure drive revenue and growth across the board." The company spent $91.45 billion in 2025, primarily on AI infrastructure including servers, data centers and networking equipment. That compares with its projections for total spending of between $91 billion and $93 billion last year. Growth in Google's cloud division, where the company is enjoying early returns on AI investment, helped the stock pare losses. The unit's revenue grew 48% to $17.7 billion in the fourth quarter ended December, compared with analysts' average estimate of a 35.2% 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 Gil Luria, D.A. Davidson analyst. "The acceleration in Google Cloud seems to justify the increased [capex] investment." The company reported total revenue of $113.83 billion for the quarter, beating analyst estimates of $111.43 billion, per LSEG data. Adjusted profit per share of $2.82 also beat estimates of $2.63. Cloud computing majors have poured hundreds of billions of dollars to expand 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 (AMZN.O), opens new tab and Microsoft's (MSFT.O), opens new tab 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 (META.O), opens new tab, the big cloud companies are expected to collectively shell out more than $500 billion on AI this year. Meta last week hiked capital investment for AI development this year by 73%, targeting spending between $115 billion and $135 billion, while Microsoft also reported record quarterly capital expenditure. The aggressive expansion in outlay comes at a time when investors have increasingly grown concerned about payoffs from AI investments. However, Google has been able to show strong progress in its AI efforts. The launch of its latest Gemini 3 model in November saw strong reception and propelled the company forward in the AI arms race. Following the launch, Sam Altman, CEO of AI frontrunner and ChatGPT creator OpenAI, reportedly issued an internal "code red" to push teams to accelerate development. Google's Gemini AI assistant app exceeded 750 million users per month, Pichai said, up by 100 million compared with November. Last month, Google struck a deal to power Apple's (AAPL.O), opens new tab revamped Siri voice assistant with its Gemini models, a partnership that unlocks a huge market for Google, with Apple's installed base of over 2.5 billion devices. Reporting by Deborah Sophia in Bengaluru and Kenrick Cai in San Francisco; Editing by Pooja Desai, Sayantani Ghosh and Matthew Lewis Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Kenrick Cai Thomson Reuters Kenrick Cai is a correspondent for Reuters based in San Francisco. He covers Google, its parent company Alphabet and artificial intelligence. Cai joined Reuters in 2024. He previously worked at Forbes magazine, where he was a staff writer covering venture capital and startups. He received a Best in Business award from the Society for Advancing Business Editing and Writing in 2023. He is a graduate of Duke University.

Google adds $55bn to capex plans as it boosts AI spending

Google said it plans to spend at least $55bn more on capital expenditure this year than Wall Street had forecast, as it doubles down on its huge spending on AI. The search giant increased its forecast for capex in 2026 to a range of $175bn to $185bn, far exceeding analysts' expectations for around $120bn, Google's parent company Alphabet said on Wednesday. Fourth-quarter capital expenditure was up to $27.9bn, almost doubling from $14bn last year and exceeding expectations for $27.7bn. It spent $91.4bn over the course of 2025, indicating that capex will double this year. "We're seeing our AI investments and infrastructure drive revenue and growth across the board," said chief executive Sundar Pichai. He said the capex forecasts were "to meet customer demand and capitalise on the growing opportunities we have ahead of us". The spending spree overshadowed a second successive quarter of $100bn-plus revenue, driven by strong earnings for the search giant's advertising and cloud computing divisions as demand for AI continues to grow. Fourth-quarter net income increased 30 per cent from the year before to $34.5bn, beating analysts' expectations of $31.9bn. The company made $132bn of profit during the whole of 2025. Revenue rose 18 per cent to $113.8bn in the three months to the end of December, beating the average estimate of $111.3bn, according to FactSet data. Annual sales surpassed $400bn for the first time. Google's core search and advertising business grew 17 per cent to $63.1bn, hitting estimates of $61.3bn. YouTube ads rose 9 per cent to $11.4bn. Cloud revenues rose 48 per cent to $17.7bn against the average $16.3bn estimate, as demand for computing power to train and run AI models escalates. Alphabet shares have rallied 61 per cent in the past 12 months, pushing its market cap past $4tn to surpass Microsoft as the third-largest company in the world. The stock initially fell more than 7 per cent in after-hours trading following the earnings report but recovered to trade down 2 per cent.

Alphabet's strong quarter eases fears about the search giant's sky-high spending

Alphabet reported fantastic fourth-quarter results on Wednesday, proof that its eye-popping spending on artificial intelligence is accelerating growth across all its businesses. Revenue in the fourth quarter ended Dec. 31 increased 18% to $113.83 billion, well ahead of the $111.43 billion expected, according to LSEG. Earnings per share (EPS) increased 31% year over year to $2.82, also breezing past estimates of $2.63, according to LSEG. GOOGL 1Y mountain Alphabet 1-year return Bottom line Alphabet posted beats in its search, network, and cloud businesses, more than offsetting a slight underperformance in YouTube ads and subscriptions, platforms, and devices. The only other blemish was a lighter operating margin, resulting in a miss on operating income. Cash flow results were superb. However, investors were most focused on management spending guidance for the current year. Capital expenditures are forecast to range from $175 billion to $185 billion, well above the Street's estimate of $115 billion and roughly double the $91 billion spent in 2025. Much of that spending will go toward its artificial intelligence buildout, which is why we see its suppliers Broadcom and Nvidia trading higher in the aftermarket. More capex from the hyperscalers means more revenue for the semiconductor and AI hardware companies. Management said that about 60% of 2025 capex went toward machine line servers, with the remaining 40% going to longer-duration assets, including data centers (including the physical building) and networking equipment. The team expects a similar ratio for 2026 capex. The Street is taking this jaw-dropping jump in spending in stride. Though the stock initially sold off on the print, it's clear that all this spending is driving significant growth and will continue to do so. We saw a similar dynamic when Meta reported last week: The social media giant's guidance offset worries about its sky-high spending on artificial intelligence. What's increasingly clear is that the Street has an issue not with the absolute level of spending, but with the expected return. While that was a bit less certain this time last year, Alphabet is now showing that the spending is paying off. Not only did sales in search and cloud outpace expectations, but growth for both key segments also accelerated sequentially. "We're seeing our AI investments and infrastructure drive revenue and growth across the board," CEO Sundar Pichai said in the release. Another concern specific to Alphabet was that adopting AI would cannibalize its Search revenue. That is not the case. Instead, even with its Gemini app now seeing more than 750 million monthly active users (MAUs), 100 million more than last quarter, and Gemini, the company's large language model, processing over 10 billion tokens per minute, Search usage broke a quarterly record. Clearly, AI is a tailwind driving even more traffic to Google Search. On the post-earnings call with investors, Pichai also noted a "sharp increase" in engagement on the Gemini app. "So all the metrics, be it active usage, the intensity of usage, retention, all showed distinct progress across iOS, web, Android, etc., and geographically, globally," he said. We've beaten ourselves up over exiting Alphabet last March. At the time, we were worried that the search business was in trouble and that the Department of Justice was pushing for a breakup of the company. Both fears proved unfounded, which is why we reinitiated our position in December. We can't let a bad call cloud our thinking. We're happy we got back in for this exceptional quarter. The eye-popping spending on AI is justified, given the accelerated growth in its most consequential businesses. As a result, we are reiterating our 1 rating on Alphabet shares and are reviewing our price target. (Jim Cramer's Charitable Trust is long GOOGL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Alphabet resets the bar for AI infrastructure spending

Sundar Pichai, chief executive officer of Alphabet Inc., during the Bloomberg Tech conference in San Francisco, California, US, on Wednesday, June 4, 2025. Google parent Alphabet beat Wall Street's expectations for its fourth quarter but a new, high bar for expected spending on artificial intelligence infrastructure tempered enthusiasm. Despite exceeding expectations on revenue, earnings per share and cloud, the Google parent's shares kept dipping in extended trading Wednesday, showing Wall Street remains sensitive toward AI spending. Alphabet said it expects 2026 capital expenditures to be in the range of $175 billion to $185 billion. The top end of that forecast would be more than double its 2025 capex spend. With the projection, Alphabet is resetting the year's expectations for how it'll spend in 2026 and testing its favor with Wall Street. The company said in October that it expected "a significant increase" to capex in 2026, but the projections shared Wednesday surpassed those of its hyperscaler peers. In its quarterly report last week, Microsoft didn't provide a specific forecast for the year, but said capex will "decrease on a sequential basis" this quarter, after the company reported spending of $37.5 billion in the latest period. Meta said it expects to spend between $115 billion and $135 billion in 2026, which at the high end would be almost double last year's figure of $72.2 billion. Amazon reports results on Thursday. Analysts expect the company's capex for 2025 to close at about $124.5 billion and for that figure to increase 18% this year to $146.6 billion, according to FactSet. Alphabet's spend increase comes at a time when Wall Street has been particularly sensitive to extra AI spend. Despite positive tech earnings, the software sector as a whole has lost 30% of its value in the last three months, CNBC's Michael Santoli said. That's due to concerns that AI tools will upend existing software tools and make higher spending riskier. Up until this point, Alphabet has been largely spared from any major stock moves, especially after it was one of the top performers of 2025. But while Wall Street balks at the bountiful spending, tech companies are racing to build more infrastructure to keep up with customer demand for AI services. Google's cloud unit, which houses most of its AI products and services, saw its backlog surge 55% sequentially and more than double year-over-year, reaching $240 billion at the end of the fourth quarter, Alphabet finance chief Anat Ashkenazi told analysts on a call Wednesday. Google recorded a nearly 48% increase in cloud revenue compared to a year ago.

Alphabet keeps the AI spending frenzy going

But shares of companies that benefit from that spending rose. Driving the news: Alphabet plans to spend $180 billion at the midpoint of its projections for the year. * Analysts tracked by Bloomberg expected Alphabet, Google's parent company, to spend just under $120 billion. * This comes after Alphabet spent over $90 billion in 2025. Zoom out: More spending presents a challenge for investors who have bid up Alphabet as their AI darling given its penchant for responsible spending. * Capex as a proportion of cash flow is the lowest for Alphabet among the hyperscalers. * But 2026 investors want a story on how this spend is benefiting profits. * That's why Meta soared after its earnings report: Yes, the company increased spending, but it told a story about how that spending is fueling great ad revenue. Follow the money: Of course, there are beneficiaries of Alphabet opening its pocketbook. * Chipmakers Nvidia, Broadcom and AMD popped up after the market close, even though all three were down during the trading day as investors rotated out of tech. Between the lines: Even if the spending isn't viewed as justified longer term, it's going to lead to boosted earnings near term for the companies providing the chips to power the AI buildout. The bottom line: Investors are more skeptical of the AI buildout.

Google parent earnings beat projections amid plans to invest deeply in AI

Alphabet reports $34.5bn profit and revenue soars 48% in recent quarter as it plans a sharp increase in AI spending Google's parent company, Alphabet, beat Wall Street expectations on Wednesday, and is planning a sharp increase in capital spending in 2026 as it continues to invest deeply in AI infrastructure. Alphabet on Wednesday reported profit of $34.5bn in the recently ended quarter, as revenue from cloud computing soared 48%. The company forecasted spending between $175bn and $185bn this year; a figure much higher than analysts expectations' of roughly $115bn. "We're seeing our AI investments and infrastructure drive revenue and growth across the board, Sundar Pichai, the Alphabet chief executive, said. Alphabet's annual revenue exceeded $400bn for the first time, Pichai added. The company reported $113.83bn in revenue for the fourth quarter of 2025 - surpassing Wall Street estimates of $111.43bn. Earnings per share (EPS) also beat Wall Street expectations: the company reported $2.82 in EPS, compared to $2.63 in EPS. The report comes after several months of good news for the company in the AI race. The newest version of Gemini, released by Google in November, is considered to be at the forefront of the generative AI industry, a development that has prompted panic at competitor OpenAI. Alphabet's stock jumped 3% when Google debuted the model. Then in January, Google and Apple announced the company will start using Gemini to power AI features like Siri; the Apple assistant has previously faced criticism for not being as advanced and accurate as its competitors. Google's valuation shot up to $4tn after the deal, making it the second-most valuable company in the world. Analysts viewed the multi-year agreement as a huge win for Google: the tech giant beat out competitors like OpenAI, and got access to Apple's user base of 2.5bn active devices. "Gemini is becoming the AI engine for the world's most successful software companies," Pichai said on Wednesday. Alphabet's projected spending on AI infrastructure means its capital expenditure could as much as double this year. Shares were volatile in after-hours trading, with investors weighing the swell in spending against surging revenue and profit. Like larger rivals Amazon Web Services and Microsoft's Azure, Google Cloud has been grappling with capacity constraints, and Pichai said the expenditures were necessary "to meet customer demand and capitalize on the growing opportunities we have ahead of us". But investors have increasingly grown concerned about payoffs from AI investments, as the big big cloud companies collectively spend massive amounts building out their infrastructure. Meta last week hiked capital investment for AI development this year by 73%. As the AI arms race heats up, Google's Gemini AI assistant app exceeded 750 million users per month, Pichai said, up by 100 million compared with November.

Alphabet earnings: Google beats expectations and bets big on AI

Wall Street came into Wednesday looking for earnings proof that Google $GOOGL can grow in the AI era without breaking its own margins. After the bell, Alphabet obliged -- Search rose, Cloud surged, profits followed. And then -- almost as if the company didn't trust the market to stay focused -- Google handed investors a number so large it hijacked the conversation within minutes: a 2026 capital spending plan that reads like a geopolitical project. The market wasn't sure what to do with that: Shares fell and then rose and then dipped and then leveled out and then rose 3% about 30 minutes after the print. But first, start with the part Wall Street claims to care about: results. Alphabet's fourth quarter brought in $113.8 billion in revenue, up 18% year over year, and $2.82 in earnings per share, up 31%. Before the print, investors had been modeling something closer to $111.3 billion in revenue and an adjusted EPS around $2.64, so Alphabet didn't just clear the bar; it left it behind. Net income climbed to $34.5 billion. Google Services -- the sprawling profit machine that includes Search, YouTube, Android, Chrome, and the rest of the consumer empire -- grew 14% to $95.9 billion. Search and other revenue rose 17%, so for all of the noise about generative AI turning search boxes into nostalgia, Google's tollbooth is still collecting. Search looks like it has found a way to absorb the AI era without surrendering its cash register. The softer spot, as usual, was the more old-school ad plumbing: Google Network revenue slipped 2% to $7.8 billion, a reminder that not every ad surface ages gracefully. YouTube also did its job. Ads grew 9% to $11.4 billion -- not a breakout, not a slump, just steady. But no one watching the print came in expecting YouTube to be spectacular. They just wanted to see whether the core machine was humming and whether the next machine was turning on. But even if the story ended here, the market's reaction would be simple: This is what dominance looks like when it's still getting bigger. But it didn't end there, because perhaps the biggest surprise in the release wasn't a revenue line. It was Cloud. Google Cloud revenue jumped 48% to $17.7 billion -- the kind of acceleration that stops being a segment update and starts being a plot twist. Better, Cloud operating income surged past $5.3 billion, more than doubling from the year-ago quarter, pushing operating margin to just over 30%. That's what investors have been begging Big Tech to deliver: proof that the AI buildout isn't just a bonfire of GPUs, but something that can throw off real profit while it scales. There were, of course, some footnotes -- because there are always footnotes. Alphabet's EPS got a boost from investment gains, including a $2.3 billion gain on equity securities that the company said added about $0.15 to diluted EPS. "Other Bets" remained what it has always been: a bucket of ambition with a negative sign in front of it. Losses widened, and Waymo alone came with a $2.1 billion employee compensation charge that pushed expenses higher. You can call that the cost of moonshots. You can also call it a reminder that Alphabet isn't merely an ad company with a side hustle; it's a conglomerate that still enjoys spending money on the future, even when the future sends invoices. None of that is what spooked investors. For 2026, Alphabet expects capex in the range of $175 billion to $185 billion -- way, way, way above the roughly $115 billion to $120 billion the street was modeling. Yes: $175 billion. Read that again, slowly, the way investors did. On an earnings night where the company had every right to brag about margins and momentum, it chose instead to underline what it's becoming: an infrastructure company, not in branding, but in behavior. Investors love the idea of "AI everywhere" -- right up until "AI everywhere" shows up as a capital plan that competes with small nations. Alphabet isn't alone in spending aggressively (the entire Big Tech cohort is building -- and building bigger), but Google is making the most explicit, most expensive statement of intent. Meta $META's capex plan for the year is $115-135 billion; Microsoft $MSFT is spending about $37.5 billion in a single quarter right now. You can already see the tension in the cash flow math. Operating cash flow rose 34% to $52.4 billion in the quarter, but free cash flow slipped to $24.6 billion because capex ate the incremental gains. Over the last 12 months, free cash flow was basically flat, up less than 1%. Alphabet can afford this. That's not the point. The point is that Alphabet is asking investors to underwrite a new phase of the company's identity, one where "discipline" is measured less by margins this quarter and more by conviction about what the next platform looks like. There's a version of this story that ends in triumph: Cloud keeps compounding, AI products become default habits, and the spend looks prescient -- the price of buying the future before someone else does. There's also a version where the returns arrive slower than depreciation, and Wall Street starts treating AI like a lifestyle choice with bad unit economics. Tonight, Alphabet gave investors both stories at once. It delivered a quarter so strong that it could have ended the debate about whether Google can compete in AI, then immediately raised a different question: How comfortable investors are watching Google compete with a checkbook? The quarter blew nearly everything out of the water. The capex plan blew up the mood. That may be the most honest snapshot of the AI era yet: The growth is real, the profits are real, and the spending is the part that makes everyone suddenly remember what "risk" means.

Alphabet is confident about plans to double capex spending to a possible $185 billion -- but it's keeping CEO Sundar Pichai up at night | Fortune

Alphabet is the latest example. During its Wednesday fourth quarter earnings call, CEO Sundar Pichai and chief financial officer Anat Ashkenazi revealed that the $4 trillion tech giant will spend between $175 billion to $185 billion in capex in 2026, possibly doubling the $91.4 billion it spent in 2025 and a far cry from the $52.5 billion spent as recently as 2024. In Q4 alone, Alphabet's capex investment reached $27.9 billion. The move is part of what Pichai described as maintaining a brutal pace to compete in AI, which is driving every single dominant player in the space -- Alphabet, Anthropic, OpenAI, Meta, Microsoft, and others -- to invest heavily in innovation and infrastructure in a fierce competition that shifts quarter to quarter. "We are in a very, very relentless innovation cadence, and I think we are confident about keeping that momentum as we go through 2026," Pichai said on the company's Q4 earnings call Wednesday. At the same time, when asked what keeps him up at night during the call, Pichai's response showed his concern about the capex surge and the longer timeline needed to convert that investment into actual working data centers, to overcome power bottlenecks, increase chip manufacturing, and master the skills needed to make it all happen. "I think specifically at this moment, maybe the top question is definitely around compute capacity [and] all the constraints -- be it power, land, supply chain constraints," Pichai said. "How do you ramp up to meet this extraordinary demand for this moment, get our investments right for the long term, and do it all in a way that we are driving efficiencies and doing it in a world-class way?" Pichai admitted to investors that all those constraints will continue to be an issue for the Google DeepMind AI lab as well as for the company's cloud services unit, despite the massive ramp up in spending and significant demand. "I do expect to go through the year in a supply constrained way," Pichai said. Alphabet's massive increase in AI infrastructure spending sets a new high water mark just one week after Meta stunned the Street by announcing plans to nearly double its capex to between $115 billion and $135 billion this year. Investors seemed unsure how to react to Alphabet's plans. The stock initially nosedived more than 6% in after hours trading Wednesday, then rose more than 2% as Pichai and his team spoke during the earnings call, only to dip slightly back into the red, down 0.4%. The company beat Wall Street profit and revenue targets during the final three months of 2025, and delivered a record year, with annual revenues exceeding $400 billion for the first time ever, and net income growing 15% to $132.2 billion. YouTube crossed the $60 billion annual revenue threshold. The total number of subscriptions across consumer services rose to more than 325 million, fueled by cloud storage business Google One and YouTube Premium. Revenues from services rose 14% to $95.9 billion, driven in part by 17% growth in Google search. Alphabet executives emphasized the various ways in which the hefty AI investments are translating into benefits for the company. Google users are searching more in AI mode than via traditional web searches, and they're spending more time on Google's sites, the company said. Business customers are taking advantage of Google Cloud's AI capabilities and using more products in the portfolio. "It's already delivering results across the business," CFO Ashkenazi said during the call, regarding the company's AI spending. According to Ashkenazi, the majority of Alphabet's capex spend was invested in technical infrastructure, with about 60% going to servers and 40% to data centers and networking equipment. Ashkenazi said those investments support "frontier model development by Google DeepMind, ongoing efforts to improve the user experience and drive higher advertiser [return on investment] in Google services, significant cloud customer demand, as well as strategic investment and other bets." She added the cloud backlog -- future contracted orders showing demand -- rose 55% this quarter and more than doubled year-over-year, hitting $240 billion at the end of Q4. The quarter capped off some major news from Alphabet in other areas. Last month, Google and Apple joined forces to announce the two behemoths will use Google's AI to power up Apple's Siri and other AI services. Apple has a reach that hits 2.5 billion devices, which could be huge for Gemini. This month, autonomous robotaxi subsidiary Waymo announced it had raised $16 billion in an investment round that valued the company at $126 billion, led by Alphabet. Prior to Alphabet's earnings release after Wednesday's market close, a broader selloff dragged various tech stocks down for a second consecutive day. The tech selloff is due to fears that AI could disrupt software and data firms like Salesforce and ServiceNow. Pichai addressed the issue on the earnings call, noting that AI is an "enabling tool," and not necessarily a threat, and that the best companies will incorporate it into their workflows. This will make them better cloud customers, he said. "The companies who are seizing the moment, I think, have the same opportunity ahead," said Pichai.

Google's annual revenue tops $400 bn for first time, AI investments rise

San Francisco (United States) (AFP) - Google parent Alphabet on Wednesday reported blockbuster earnings, its revenue climbing as it invests massively in cloud computing services enhanced with artificial intelligence. The tech giant said revenue jumped 18 percent year-on-year in the quarter, and overall annual revenue topped $400 billion for the first time at the company founded by Larry Page and Sergey Brin in 1998. But Alphabet said it will nearly double its investments this year in the technology arms race gripping Silicon Valley. The company expects capital expenditures between $175 billion and $185 billion in 2026, double its 2025 spending, to meet customer demand for AI products. Despite Alphabet relentlessly investing in computing infrastructure for AI, demand outstrips supply, according to chief executive Sundar Pichai. "We've been supply constrained even as we've been ramping up our capacity," Pichai said on an earnings call. Alphabet shares were down slightly more than one percent in after-market trades. Gemini wins fans Google's Gemini AI continued to grow quickly, ending the year with 750 million monthly users in an increase of 100 million from the previous quarter. "We expect Google to overtake OpenAI this year for the top spot in AI," said Emarketer analyst Nate Elliott. Alphabet brought in $113.8 billion in the final three months of 2025, powered by its core search business and cloud computing, earnings figures showed. Alphabet reported profit of $34.5 billion in the recently ended quarter as revenue from cloud computing soared 48 percent to $17.7 billion. "We're seeing our AI investments and infrastructure drive revenue and growth across the board," Pichai said. Google's core search and advertising business remained the primary revenue driver, generating $82.3 billion, up from $72.5 billion a year earlier. YouTube advertising revenues also grew strongly to $11.4 billion from $10.5 billion. The cash flowing in from online advertising gives Alphabet an advantage when it comes to investing in AI infrastructure. Google said it now counts over 325 million paid subscriptions across consumer services, including Google One and YouTube Premium. The cloud division, which competes with Amazon Web Services and Microsoft Azure, has become a key growth engine for Alphabet. Keeping Chrome Alphabet continues to benefit from a US court ruling late last year that spared the Internet giant from having to sell off its Chrome browser to address monopoly concerns. Google recently notified the court it will appeal the federal judge's ruling that it held an illegal monopoly on online search, court records show. Despite the robust growth, Alphabet's experimental "Other Bets" division, which includes autonomous vehicle unit Waymo, posted a loss of $3.6 billion on revenues of just $370 million. Self-driving car star Waymo said this week that it raised $16 billion in a funding round that valued the Alphabet subsidiary at $126 billion. Alphabet was the majority investor in that funding round. Waymo co-chief executives Tekedra Mawakana and Dmitri Dolgov touted the massive investment as a sign that the age of large-scale autonomous mobility has arrived. "This infusion of capital will ensure we are positioned to move forward with unprecedented velocity, while maintaining our industry-leading safety standards," Dolgov and Mawakana said in a blog post. Last year, Waymo more than tripled its annual volume to 15 million rides and now provides more than 400,000 rides weekly in the six major US metropolitan areas where it operates, according to the company.

Alphabet to jack up AI spending as Google Cloud and ad business revenues shine - SiliconANGLE

Alphabet to jack up AI spending as Google Cloud and ad business revenues shine Google LLC's parent company Alphabet Inc. beat expectations as it delivered its fourth-quarter financial results today, but its stock was trading lower after it revealed plans for a dramatic increase in its investments in artificial intelligence data centers over the next year. The company reported earnings before certain costs such as stock compensation of $2.82 per share, easily beating the analyst consensus estimate of $2.63 per share. Revenue for the period came to $113.83 billion, up 18% from a year earlier and above Wall Street's target of $111.43 billion. All told, Alphabet generated $34.45 billion in net income, up from $26.53 billion one year ago. The most concerning number was not Alphabet's top or bottom line but its capital expenditure forecast for fiscal 2026. The company said in October that it was planning a "significant increase" in spending in the new year, and that wasn't a lie. Today, it forecast capex in the range of $175 billion to $185 billion, which is more than double its 2025 spending. Alphabet Chief Financial Officer Anat Ashkenazi told analysts on a conference call that most of the capex will go toward investing in artificial intelligence compute capacity for Google DeepMind and meeting "significant cloud customer demand." In addition, some of the money will go toward strategic investments in the company's "Other Bets" segment and on driving higher returns for advertisers. Despite Ashkenazi's assurances that the increased spending is a good thing, investors reacted negatively to the forecast, and the company's stock was down more than 2% in late trading. Nonetheless, the performance of Google's ad business went a long way toward quelling fears that its competitors in the AI industry might erode its main source of revenue in future. Ad revenue from Google Search was up 17% from a year earlier, easily surpassing Wall Street's consensus. YouTube ad sales were less spectacular, falling just shy of the analysts' consensus estimate, but it was a strong quarter for ads overall. "Our advertising results were negatively affected from the lapping of the strong spend on U.S. election in the fourth quarter of 2024," Ashkenazi said, indicating that the year-over-year comparison would have been even more impressive if not for that. About a year ago, investors were becoming increasingly concerned that Alphabet's core business, Google Search, could be in trouble. The company had the shock of its life when OpenAI Group PBC's ChatGPT first emerged in late 2022, and for a long time it struggled to match the capabilities of its rivals' leading AI models. However, that has now changed. With the arrival of Gemini 3 in November, Google's top model is widely considered to be at least on a par with those built by OpenAI and other AI companies, such as Anthropic PBC. Google has made Gemini a core feature of Search with the introduction of AI Overviews, which provides AI-generated summaries of search results above its traditional list of links. It has proven to be highly effective, helping the company to maintain a near 90% market share. Meanwhile, the Google Cloud business is also going strong. Revenue from the unit, which houses most of Google's AI services and products, jumped 48% from a year earlier, to $17.66 billion, surpassing the Street's $16.18 billion forecast. Its order backlog increased 55%, reaching $240 billion by the end of the quarter, Ashkenazi said. Google Cloud's growth is an encouraging sign that reinforces the idea that Alphabet's core monetization engine remains intact and is scaling aggressively enough that it can support an elevated investment cadence, said Investing.com analyst Thomas Monteiro. "Despite increased investor scrutiny, this print supports the view that Google is spending into strength and differentiation, not spending to stay relevant," he added. "The capex step-up is being pulled forward by real product and platform momentum rather than being purely defensive." Alphabet Chief Executive Sundar Pichai (pictured) said on the call that the Gemini AI app now counts more than 750 million monthly active users, up from 650 million at the end of the last quarter. "As we scale, we are getting dramatically more efficient," he said. "We were able to lower Gemini serving unit costs by 78% over 2025 through model optimizations, efficiency and utilization improvements." Valoir analyst Rebecca Wettemann told SiliconANGLE that Google has made significant strides, both in terms of Gemini's performance and its efficiency. "Since its release, fans have raved about Gemini's improvements in reasoning, multimodal handling, and enlarged context windows," she said. "But Google is focused not just on delivering AI, but making it more efficient. This is really important as the market continues to grumble about an AI bubble and the cost of delivering on data centers." Alphabet's Other Bets segment, which includes the self-driving car unit Waymo and the life sciences business Verily, posted revenue of $370 million in the quarter, down 7% from a year earlier. Its overall loss came to $3.61 billion, up more than 200%. About $2.1 billion of that loss stemmed from stock-based compensation charges related to Waymo's research and development expenses. The robotaxi firm is making good progress, though, recently closing on a fresh round of funding that increased its value to $16 billion. It served more than 15 million trips across five major U.S. cities in 2025, including Austin, Texas, Atlanta, Los Angeles, Phoenix and the San Francisco Bay Area.

Google parent Alphabet predicts a sharp surge in 2026 capital spending on AI

Subscribe to the Daily newsletter.Fast Company's trending stories delivered to you every day Cloud computing majors have poured hundreds of billions of dollars to grow 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 three cloud companies are expected to collectively shell out more than $500 billion on AI this year. Meta last week hiked its capital investment for AI development this year by 73%, targeting spending between $115 billion and $135 billion, while Microsoft also reported record quarterly capital expenditure.

Google's quarterly results paint a picture of an internet powerhouse getting stronger in AI age

SAN FRANCISCO (AP) -- Google's latest quarterly report provided further evidence that its internet empire is withstanding an artificial intelligence shakeup that's turning into another potential boon for the company. The numbers released Wednesday marked Google's third consecutive quarter of digital ad growth of more than 10% from the previous year, while also posting more than 30% sales growth in its division that powers data centers for AI services. Those increases during the October-December period propelled Google's corporate parent Alphabet Inc. well past the earnings forecasts of stock market analysts. Alphabet's fourth-quarter profit rose 30% from the prior year to $34.5 billion, or $2.82 per share, while revenue climbed 18% to $113.8 billion. The collective momentum of Google's main business in search and advertising and the still-nascent AI field indicates a company born during the late 1990s internet boom is becoming even stronger during another technology phenomenon nearly 30 years later. "Search saw more usage than ever before, with AI continuing to drive an expansionary moment," Alphabet CEO Sundar Pichai said. Google's successful evolution has helped drive up Alphabet's stock price nearly 60% in the past five months, giving it a $4 trillion market value. That may have raised the bar for Alphabet to impress investors as the company's shares dipped 1% in extended trading following the report. Apple, also currently worth $4 trillion, thinks so highly of Google's AI that the iPhone maker recently struck a deal to use Google's Gemini technology in a long-delayed upgrade to its virtual assistant, Siri. Google is also embedding more of its Gemini AI into its long-dominant search engine, Gmail and Chrome browser as it tries to avoid complacency and being outmaneuvered by up-and-coming companies such as OpenAI, Anthropic and Perplexity. To meet the challenge, Alphabet has been on a spending spree to expand its AI capacity. After pouring $91 billion into capital expenditures devoted mostly to AI last year, the Mountain View, California company is expected to spend even more this year. Its capital expenditure budget has ballooned from about $30 billion annually since 2022 when OpenAI released its ChatGPT chatbot to much acclaim, prompting Google to pull out all the stops to catch up. Google's thriving digital ad business is helping finance the spree. Its digital ad sales totaled $82.3 billion in the fourth quarter, up 14% from the previous year. Google Cloud, which oversees the data centers behind many AI services, posted revenue of $17.7 billion, a 48% increase. Search saw more usage than ever before, with AI continuing to drive an expansionary moment

Google Q4 results paint picture of an internet powerhouse getting stronger in AI age

SAN FRANCISCO -- Google's latest quarterly report provided further evidence that its internet empire is withstanding an artificial intelligence shakeup that's turning into another potential boon for the company. The numbers released Wednesday marked Google's third consecutive quarter of digital ad growth of more than 10% from the previous year, while also posting more than 30% sales growth in its division that powers data centers for AI services. Those increases during the October-December period propelled Google's corporate parent Alphabet Inc. well past the earnings forecasts of stock market analysts. Alphabet's fourth-quarter profit rose 30% from the prior year to $34.5 billion, or $2.82 per share, while revenue climbed 18% to $113.8 billion. The collective momentum of Google's main business in search and advertising and the still-nascent AI field indicates a company born during the late 1990s internet boom is becoming even stronger during another technology phenomenon nearly 30 years later. "Search saw more usage than ever before, with AI continuing to drive an expansionary moment," Alphabet CEO Sundar Pichai said. Google's successful evolution has helped drive up Alphabet's stock price nearly 60% in the past five months, giving it a $4 trillion market value. The company's shares gained about 2% in extended trading after initially dipping amid investor concerns about the soaring costs of building more data centers to support Google's charge into the AI age. . Apple, also currently worth $4 trillion, thinks so highly of Google's AI that the iPhone maker recently struck a deal to use Google's Gemini technology in a long-delayed upgrade to its virtual assistant, Siri. Google is also embedding more of its Gemini AI into its long-dominant search engine, Gmail and Chrome browser as it tries to avoid complacency and being outmaneuvered by up-and-coming companies such as OpenAI, Anthropic and Perplexity. To meet the challenge, Alphabet has been on a spending spree to expand its AI capacity. After pouring $91 billion into capital expenditures devoted mostly to AI, the Mountain View, California, company disclosed Wednesday that it expects to double down by spending another $175 billion to $185 billion this year. Its capital expenditure budget has ballooned from about $30 billion annually since 2022 when OpenAI released its ChatGPT chatbot to much acclaim, prompting Google to pull out all the stops to catch up. Alphabet's projected budget for capital expenditures represents nearly half of its 2025 revenue of $403 billion -- a "jarring" commitment, said Ethan Feller, a stock strategist for Zacks Investment Research. But the past quarter "supports the view that Google is spending into strength and differentiation, not spending to stay relevant," said Investing.com Thomas Monteiro. Google's thriving digital ad business is helping to finance the spending spree. Its digital ad sales totaled $82.3 billion in the fourth quarter, up 14% from the previous year. Google Cloud, which oversees the data centers behind many AI services, posted revenue of $17.7 billion, a 48% increase. It looked like Google might be facing a potentially huge setback in 2024 when a federal judge condemned its search engine as an illegal monopoly in a case brought by the U.S. Justice Department. To curb Google's abuses, the Justice Department proposed a breakup that would have required the sale of its Chrome browser. But U.S. District Judge Amit Mehta rejected that idea and ordered less severe changes, partly because he believed the rise of AI would help rein in Google. Both the Justice Department and Google are appealing that decision.

Alphabet CEO: AI Is Driving Growth 'Across The Board'

"Overall, we are seeing our AI investments and infrastructure drive revenue and growth across the board to meet customer demand and capitalize on the growing opportunities ahead of us,' says Alphabet CEO Sundar Pichai. Google parent company Alphabet ended its latest fiscal year with what CEO Sundar Pichai called a "tremendous quarter," one that saw the Mountain View, Calif.-based company's annual revenue breach the $400 billion mark for the first time thanks to growth in its AI and Google Cloud business. On the AI side, Alphabet sold more than 8 million paid seats of its Gemini Enterprise business AI platform, which was launched just four months ago, Pichai told analysts in his prepared remarks during the company's fiscal fourth quarter 2025 financial conference call. The company's Gemini AI app now has over 750 million monthly active users, he said. "We are also seeing significantly higher engagement per user, especially since the launch of Gemini 3 in December," he said. "Overall, we are seeing our AI investments and infrastructure drive revenue and growth across the board to meet customer demand and capitalize on the growing opportunities ahead of us." [Related: Google's CEO Pichai On Six Key Product Areas For Business Users As Quarterly Revenue Tops $100B] Growth in Alphabet's AI business comes from what Pichai called an "unrivaled" infrastructure. "Our unrivaled infrastructure serves as the bedrock of our AI stack," he said. "We have the industry's widest variety of compute options that includes GPUs from our partner Nvidia, who announced at CES that we'll be among the first to offer the latest Vera Rubin GPU platform, plus our own TPUs (Tensor Processing Units) that we have been developing for a decade." Alphabet in December also unveiled plans to acquire Intersect, which provides data center and energy infrastructure solutions, Pichai said. "As we scale, we are getting dramatically more efficient," he said. "We were able to lower Gemini serving unit costs by 78 percent over 2025 through model optimizations, efficiency, and utilization improvements." Alphabet's new Gemini 3 technology is driving the state of the art in reasoning and multimodal understanding, and has enjoyed the fastest adoption of any model in the company's history, Pichai said. "Since launch, Gemini 3 Pro has consistently processed three times as many daily tokens on average as [Gemini] 2.5 Pro," he said. "Our latest model powers Google Antigravity, our new development platform where agents can autonomously plan and execute complex software tasks. It already has more than 1.5 million weekly active users after launching just over two months ago. Our first-party models like Gemini now process over 10 billion tokens per minute via direct API used by our customers, up from 7 billion last quarter." When it comes to Google Cloud, Alphabet's growth in revenue, operating margin, and backlog highlights the strength of its entire portfolio, Pichai said. Alphabet exited fiscal year 2025 with double the new customer velocity compared to the first fiscal quarter of the year, he said. "We are also signing larger customer commitments," he said. "The number of deals in 2025 over a billion dollars surpassed the previous three years combined." Google Cloud also continues to see deeper relationships with existing customers who are outpacing their initial commitments by over 30 percent, Pichai said. "Nearly 75 percent of Google Cloud customers have used our vertically optimized AI from chips to models to AI platforms and enterprise AI agents, which offer superior performance, quality, security, and cost efficiency," he said. "These AI customers use 1.8 times as many products as those who do not, enabling us to diversify our product portfolio, deepen customer relationships, and accelerate revenue growth." The Google Cloud product line has multiple monetization levers including infrastructure, platform. and high-margin AI-powered products and services, with 14 product lines that each exceed $1 billion in annual revenue, Pichai said. "We offer leading infrastructure for AI training and inference to our cloud customers, with the industry's widest variety of compute options from our own seventh-generation Ironwood TPU to the latest Nvidia GPUs," he said. "Our 10-year track record in building our own accelerators with expertise in chips, systems, networking, and software translates to leading power and performance efficiency for large scale inference and training." Alphabet By The Numbers For its fourth fiscal quarter 2025, which ended December 31, Alphabet reported total revenue of $113.83 billion, up 17 percent from the $96.47 billion the company reported for its fourth fiscal quarter 2024. This includes Google Cloud revenue of $17.66 billion, up from last year's $11.96 billion; search revenue of $63.07 billion, up from $54.03 billion; YouTube revenue of 8.83 billion, down from $7.95 billion; subscription, platform, and device revenue of $13.58 billion, up from $11.63 billion; and "other" revenue of $370 million, down from $400 million. The U.S. accounted for $55.44 billion in revenue up from $47.38 billion. Total revenue beat analyst expectations by $2.34 billion, according to Seeking Alpha. GAAP net income for the quarter was $34.46 billion or $2.82 per share, up from last year's $26.54 billion or $2.15 per share. GAAP earnings beat analyst expectations by 18 cents per share, according to Seeking Alpha. At the end of the quarter, Alphabet had a total of 190,820 employees, up from 183,323 employees at the end of fiscal 2024. Total revenue for full fiscal year 2025 was $402.84 billion, up from last year's $350.02 billion. Alphabet also reported full fiscal year 2025 GAAP net income of $132.17 billion or $10.81 per share, up from last year's $100.12 billion or $8.04 per share. Company shares were down a little more than 1 percent in after-hours trading.

Google Plans to Double Capex Spending as Cloud Growth Soars 48% | The Motley Fool

The search leader's artificial intelligence (AI) strategy is paying off. Questions about the future of artificial intelligence (AI) have surged in recent months. The biggest question among investors is whether companies can recoup the massive investments they're making to capitalize on demand for AI. Amid this uncertainty, Alphabet (GOOGL 1.96%) (GOOG 2.08%) sought to answer that question when it reported its quarterly results after the market close on Wednesday. What became immediately apparent is that demand for AI continues to fuel rapid cloud growth, and Alphabet plans to continue heavy investment to capitalize on the opportunity. For the fourth quarter, revenue of $113.8 billion jumped 18% year over year, and 17% in constant currency. Operating margin held steady at 32%, driving diluted earnings per share (EPS) up 31% to $2.82. To give those numbers context, analysts' consensus estimates called for revenue of $111.48 billion and EPS of $2.64, so Alphabet cleared both hurdles with room to spare. Google search and the related advertising account for the lion's share of Alphabet's revenue. Fears that AI could funnel ad revenue away led investors to watch the segment results closely. Google's search revenue climbed 17% year over year, which was partially offset by weakness at YouTube, which grew about 9%. In all, Google ad revenue grew 14%, helping quell those concerns for now. The other area of particular interest to investors in Google Cloud which also serves as the repository for much of the company's AI strategy. Continuing demand for AI services was on full display, as cloud revenue of $17.7 billion surged 48%, accelerating from 34% growth in the third quarter. This far outpaced Microsoft's Azure Cloud growth of 39%, showing that Google is gaining on its rival. Perhaps more telling is the segment's operating margins, which climbed to 30.1%, up from 23.7% in Q3. This shows that Google Cloud is leveraging its assets to drive more profits to the bottom line. During the earnings call, Alphabet said it sold more than 8 million paid seats of Gemini Enterprise, and noted that the Gemini app now has more than 750 million monthly active users. Furthermore, it's seeing significant increases in user engagement since the release of Gemini 3. As a result, demand for cloud and AI is currently outstripping supply. It should come as no surprise, then, that Alphabet announced plans to boost its investment in cloud and AI. As such, it expects to roughly double its capital expenditures (capex), spending between $175 billion and $180 billion in 2026, up from roughly $91 billion last year. Alphabet is sitting in the sweet spot, with accelerating cloud growth and unmet demand. Investors have rewarded the company by driving its share price up 65% over the past year. Despite its success, the search leader is still attractively priced, selling for less than 30 times forward earnings. That makes Alphabet stock a buy.

Google parent Alphabet latest tech giant to announce plans to spend...

Alphabet said Wednesday that capital expenditure could as much as double this year, in yet another aggressive spending ramp-up by the Google parent as it deepens investments to push ahead in the AI race. Alphabet shares were volatile in after-hours trading -- falling 6% 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 $175 billion to $185 billion this year, a massive jump compared with average analyst expectations that it would spend about $115.26 billion this year, according to data compiled by LSEG. CEO Sundar Pichai said in a release that Alphabet hiked its forecast spending "to meet customer demand and capitalize on the growing opportunities we have ahead of us." He added: "We're seeing our AI investments and infrastructure drive revenue and growth across the board." The company spent $91.45 billion in 2025, primarily on AI infrastructure including servers, data centers and networking equipment. That compares with its projections for total spending of between $91 billion and $93 billion last year. Growth in Google's cloud division, where the company is enjoying early returns on AI investment, helped the stock pare losses. The unit's revenue grew 48% to $17.7 billion in the fourth quarter ended December, compared with analysts' average estimate of a 35.2% 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 Gil Luria, D.A. Davidson analyst. "The acceleration in Google Cloud seems to justify the increased [capex] investment." The company reported total revenue of $113.83 billion for the quarter, beating analyst estimates of $111.43 billion, per LSEG data. Adjusted profit per share of $2.82 also beat estimates of $2.63. Cloud computing majors have poured hundreds of billions of dollars to expand 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 $500 billion on AI this year. Meta last week hiked capital investment for AI development this year by 73%, targeting spending between $115 billion and $135 billion, while Microsoft also reported record quarterly capital expenditure. The aggressive expansion in outlay comes at a time when investors have increasingly grown concerned about payoffs from AI investments. However, Google has been able to show strong progress in its AI efforts. The launch of its latest Gemini 3 model in November saw strong reception and propelled the company forward in the AI arms race. Following the launch, Sam Altman, CEO of AI frontrunner and ChatGPT creator OpenAI, reportedly issued an internal "code red" to push teams to accelerate development. Google's Gemini AI assistant app exceeded 750 million users per month, Pichai said, up by 100 million compared with November. Last month, 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 over 2.5 billion devices.

Google parent Alphabet says it could double capital spending in 2026

Feb 4 (Reuters) - Alphabet said on Wednesday that capital expenditure could as much as double this year, in yet another aggressive spending ramp-up by the Google parent as it deepens investments to push ahead in the AI race. Alphabet shares were volatile in after-hours trading - falling 6% 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 $175 billion to $185 billion this year, a massive jump compared with average analyst expectations that it would spend about $115.26 billion this year, according to data compiled by LSEG. CEO Sundar Pichai said in a release that Alphabet hiked its forecast spending "to meet customer demand and capitalize on the growing opportunities we have ahead of us." He added: "We're seeing our AI investments and infrastructure drive revenue and growth across the board." The company spent $91.45 billion in 2025, primarily on AI infrastructure including servers, data centers and networking equipment. That compares with its projections for total spending of between $91 billion and $93 billion last year. Growth in Google's cloud division, where the company is enjoying early returns on AI investment, helped the stock pare losses. The unit's revenue grew 48% to $17.7 billion in the fourth quarter ended December, compared with analysts' average estimate of a 35.2% 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 Gil Luria, D.A. Davidson analyst. "The acceleration in Google Cloud seems to justify the increased [capex] investment." The company reported total revenue of $113.83 billion for the quarter, beating analyst estimates of $111.43 billion, per LSEG data. Adjusted profit per share of $2.82 also beat estimates of $2.63. Cloud computing majors have poured hundreds of billions of dollars to expand 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 $500 billion on AI this year. Meta last week hiked capital investment for AI development this year by 73%, targeting spending between $115 billion and $135 billion, while Microsoft also reported record quarterly capital expenditure. The aggressive expansion in outlay comes at a time when investors have increasingly grown concerned about payoffs from AI investments. However, Google has been able to show strong progress in its AI efforts. The launch of its latest Gemini 3 model in November saw strong reception and propelled the company forward in the AI arms race. Following the launch, Sam Altman, CEO of AI frontrunner and ChatGPT creator OpenAI, reportedly issued an internal "code red" to push teams to accelerate development. Google's Gemini AI assistant app exceeded 750 million users per month, Pichai said, up by 100 million compared with November. Last month, 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 over 2.5 billion devices. (Reporting by Deborah Sophia in Bengaluru and Kenrick Cai in San Francisco; Editing by Pooja Desai, Sayantani Ghosh and Matthew Lewis)