Big Tech AI Race Pushes Capital Expenditures to $650 Billion as Investor Pressure Mounts

Amazon and Google are winning the AI capex race -- but what's the prize? | TechCrunch

Sometimes, it can seem like the AI industry is racing to see who can spend the most money on data centers. Whoever builds the most data centers will have the most compute, the thinking goes, and thus be able to build the best AI products, which will guarantee victory in the years to come. There are limits to this way of thinking -- traditionally, businesses eventually succeed by making more money and spending less -- but it's proven remarkably persuasive for large tech companies. If that is the game, Amazon does seem to be winning. The company announced in its earnings on Thursday that it projects $200 billion in capital expenditures throughout 2026, across "AI, chips, robotics, and low earth orbit satellites." That's up from the $131.8 billion in capex in 2025. It's tempting to attribute the whole capex budget to AI. But unlike most of its competitors, Amazon has a significant physical plant, some of which is being converted for use by expensive robots, so the non-AI expenses aren't so easy to wave away. Google is close behind. In its earnings on Wednesday, the company projected between $175 billion and $185 billion in capital expenditures for 2026, up from $91.4 billion the previous year. It's significantly more than the company spent on fixed assets last year, and significantly more than most of its competitors are spending. Meta, which reported last week, projected $115 to $135 billion in capex spending for 2026, while Oracle (once the poster child for AI infrastructure) projects a measly $50 billion. Microsoft doesn't have an official projection for 2026 yet, but the most recent quarterly figure was $37.5 billion, which pencils out to roughly $150 billion, assuming it keeps up. It's a notable increase, and one that has led to investor pressure on CEO Satya Nadella -- but it still puts the company in third place. From within the tech world, the logic here is simple. The revolutionary potential of AI is going to turn high-end compute into the scarce resource of the future, and only companies that control their own supply will survive. But while Google, Amazon, Microsoft, Meta, Oracle and others are frantically prepping for the compute desert of the future, their investors aren't convinced. Each company saw its stock price plummet as investors balked at the hundreds of billions of dollars being committed, and companies with higher spends tended to drop more. Crucially, this isn't just a problem for companies like Meta that haven't figured out their AI product strategy yet. It's everyone -- even companies like Microsoft and Amazon with a robust cloud business and a straightforward take on how to make money in the AI era. The numbers are simply too high for investor comfort. Investor sentiment isn't everything -- and in this case, it may not do much to change the industry's mind. If you believe AI is about to change everything (and the argument is pretty compelling at this point), you'd be a fool to change course just because Wall Street got jumpy. But going forward, big tech companies will be under a lot of pressure to downplay how expensive their AI ambitions really are.

Four AI giants plan capex bigger than Israel's GDP

AIpocolypse Four tech megacorps intend to collectively fork out roughly $635 billion this year on capex, much of it for datacenters and AI infrastructure - more than the entire output of Israel's economy and well beyond all global cloud infrastructure services revenue generated last year. The tech titans are all trying to outdo each other by spending eye-watering amounts on capex, the majority of which will go on AI and cloud expansion, but the big four - AWS, Microsoft, Google and Meta - are investing at a different scale. Amazon says it expects to spend $200 billion in 2026, with most of that headed to AWS. Google is aiming to pump $180 billion into building and equipping datacenters, while Meta expects capex in the range of $115 billion to $135 billion, and Microsoft is running at a pace that implies around $120 billion a year in spending. That adds up to $635 billion, more than the $610 billion that represented Israel's entire gross domestic product during 2025, and approaching that of Sweden at $662 billion, according to figures from the IMF. These extraordinary sums show how far the industry leaders are willing to go to gain some kind of advantage in the AI race, even though returns on all the spending have so far failed to live up to expectations, and investors are reportedly getting restless. Microsoft's share price fell about 10 percent after its recent results were announced, for example, due to investors expecting a bigger payoff. The wider cost for users? The massive splurge on infrastructure is driving shortages of components like memory as manufacturers prioritize chip production that cashes in on the lucrative datacenter market, rather than those for everyday PCs and phones. The huge capex pledges also add up to more than total cloud infrastructure services revenue in 2025. According to the latest figures from Synergy Research Group, the revenues reached $419 billion last year. This is despite the cloud market itself continuing to grow at an impressive pace, running at about 30 percent year-on-year and marking a ninth consecutive quarter of accelerating growth. "GenAI has simply put the cloud market into overdrive," said Synergy Research Group chief analyst John Dinsdale. "AI-specific services account for much of the growth since 2022, but AI technology has also enhanced the broader portfolio of cloud services, driving revenue growth across the board. The leading cloud providers have all seen their revenue growth rates jump." The big three clouds continue to dominate with Synergy putting their shares of the worldwide market in Q4 2025 at 28 percent for Amazon (AWS), 21 percent for Microsoft Azure, and Google Cloud at 14 percent. Among the tier-two cloud providers, those with the highest growth rates include CoreWeave, Oracle, Crusoe, and Nebius, all providers of AI infrastructure services. In particular, CoreWeave is now generating more than $1.5 billion in quarterly cloud revenue and has joined the top ten cloud providers, Synergy says. ®

AI Race Sends Big Tech's Capital Spending to Stratospheric High

Four of the biggest US technology companies together have forecast capital expenditures that will reach about $650 billion in 2026 -- a mind-boggling tide of cash earmarked for new data centers and the long list of equipment needed to make them tick, including artificial intelligence chips, networking cables and backup generators. The spending planned by Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp., all in pursuit of dominance in the still-nascent market for AI tools, is a boom without a parallel this century. Each of the companies' estimated outlay for this year would set a high-water mark for capital spending by any single corporation in any one of the past 10 years, according to Bloomberg data. The search for a comparison to the high-flying spending projections -- which came as the four reported earnings in the past two weeks -- requires going back at least as far as the telecommunications bubble of the 1990s, and perhaps to the build-out of the US railroad networks in the 19th century or postwar federal investments in interstate highways or even New Deal-era relief programs. The ever-larger numbers -- in total, an estimated 60% increase from a year ago -- means yet another acceleration in the wave of data center construction taking place around the world. The sprint to build these sprawling facilities, which hold racks of humming servers powered by expensive processors, has pinched energy supplies, raised worries of inflated prices for other users, and brought developers into conflict with communities worried about competition for power or water. It also raises the risk that construction spending by a narrow set of affluent companies, already accounting for a rising share of economic activity in the US, will distort big-picture economic data. The four companies "see the race to provide AI compute as the next winner-take-all or winner-takes-most market," said Gil Luria, an analyst at DA Davidson. "And none of them is willing to lose." Last week, Meta said full-year capex will rise to as much as $135 billion -- a potential jump of about 87%. Microsoft the same day reported a 66% increase in second-quarter capital spending, topping estimates, and analysts project it will shell out almost $105 billion in capex for the fiscal year ending in June. The news triggered the second-biggest single-day decline in market value for any stock. Alphabet, founded in a garage south of San Francisco in 1998, on Wednesday rattled investors when it revealed a capital spending forecast that exceeded not just analyst estimates, but the spending of a vast swath of US industry -- it plans to spend as much as $185 billion. And Amazon on Thursday bested that with a planned $200 billion in capital expenditures for 2026, also sending its shares tumbling in extended trading. By contrast, the largest US-based automakers, construction equipment manufacturers, railroads, defense contractors, wireless carriers, parcel delivery outfits, along with Exxon Mobil Corp, Intel Corp., Walmart Inc. and the spun-off progeny of General Electric -- 21 companies -- are projected to spend a combined $180 billion in 2026, according to estimates compiled by Bloomberg. Each tech giant has laid out a slightly different route to recouping their investments, but their spending is based on the same premise: that OpenAI's ChatGPT and rival tools capable of generating text and displaying elements of human reasoning will play an increasingly important role for people at work and at home. Building the cutting-edge software models that makes this shift possible is an extraordinarily expensive process that requires stringing together thousands of chips that sell for tens of thousands of dollars apiece. Hence the big bills. The spending is also predicated on the notion that the end products will result in exponentially higher future revenue. The outlays are transforming companies that just a few years ago had a relatively small physical footprint, even as their digital services found their way to billions of people. For much of their existence, Meta and Google parent Alphabet counted their plush corporate campuses and office space as a significant portion of their real-world assets. Most of their spending went toward salaries and stock grants for the engineers and salespeople who worked there. No longer. Last year, Meta spent more on capital projects than research and development -- mostly engineers' salaries -- for the first time in six years. The Facebook and Instagram parent at the end of last year owned $176 billion in property and equipment, about five times the tally at the end of 2019. As the numbers push higher, what is still unclear is whether the companies will all be able to execute on their lofty ambitions. Since the data center build-out has escalated, they're already competing for finite crews of electricians, cement trucks and Nvidia Corp. chips rolling out of Taiwan Semiconductor Manufacturing Co. factories. "There are and will be bottlenecks," Luria said. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg may send me offers and promotions. Plus Signed UpPlus Sign UpPlus Sign Up By submitting my information, I agree to the Privacy Policy and Terms of Service. There's also the question of how they will afford it. Meta and Google, whose profit mainly comes from digital advertising; Amazon, the largest online retailer and cloud-computing provider; and Microsoft, the biggest seller of business software, are each dominant in their industries and have ample cash cushions. Their willingness to plow huge chunks of that cash into an AI-fueled future means those reserves, and investors' patience, will be tested. "You've had these cash-generating machines," said Tomasz Tunguz, an investor at Theory Ventures, who earlier in his career worked at Google. "Now, all of a sudden they need that cash, and they need more of it, so they're borrowing." Tunguz, who published a blog last year comparing the AI boom to past investment frenzies, says they don't always end well. But on the way up, he said, "they are all huge catalysts for the economy." What is more certain is that investors who had rushed to buy the tech titans' stocks over the past year have shown greater hesitance in the face of the skyrocketing capital spending across the board, in some cases selling even when their main businesses -- from online advertising and web search to ecommerce and productivity software -- have held steady and revenue has exceeded estimates. "What's spooking people? Definitely the analyst narrative and the rhetoric" about the pace at which AI will disrupt businesses, said Steve Lucas, chief executive officer of Boomi, a firm that helps companies stitch together their data and software. "I would not debate the potential of AI," he said. "I would absolutely debate the time frame, and I would passionately debate the economics."

Tech AI spending may approach $700 billion this year, but the blow to cash raises red flags

For investors who love cash above all else, some warning signs may be flashing. With the heart of tech earnings season wrapping up this week, Wall Street has a clearer picture of how the artificial intelligence race is poised to accelerate in 2026. The four hyperscalers are now projected to increase capital expenditures by more than 60% from the historic levels reached in 2025, as they load up on high-priced chips, build new mammoth facilities and buy the networking technology to connect it all. Getting to those kinds of numbers is going to require sacrifice in the form of free cash flow. Last year, the four biggest U.S. internet companies generated a combined $200 billion in free cash flow, down from $237 billion in 2024. The more dramatic drop appears to be ahead, as companies invest heavily upfront, promising future returns on investment. That means, margin pressures. less cash generation in the near term and the potential need to further tap the equity and debt markets. Alphabet held a $25 billion bond sale in November, and it's long-term debt quadrupled in 2025 to $46.5 billion. Amazon, which on Thursday said it expects to spend $200 billion this year, is now looking at negative free cash flow of almost $17 billion in 2026, according to analysts at Morgan Stanley, while Bank of America analysts see a deficit of $28 billion. In a filing with the SEC on Friday, Amazon let investors know that it may seek to raise equity and debt as its buildout continues.

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

Alphabet to report earnings: AI, ad momentum key to the fourth quarter

Sundar Pichai, CEO of Google and Alphabet, attends the inauguration of a new hub in France dedicated to the artificial intelligence sector, at the Google France headquarters in Paris, France, on Feb. 15, 2024. Alphabet is set to report its fourth-quarter earnings Wednesday after the bell. Here's what analysts polled by LSEG are expecting: Wall Street is also watching several other numbers in the report. Here is what analysts polled by StreetAccount are expecting: Alphabet's latest earnings results will test how far the company can rally Wall Street's favor. As one of the Street's top performers of 2025, Alphabet's stock has risen more than 70% in the past six months. Last month, Google became the fourth member of the $4 trillion club, joining Nvidia, Microsoft and Apple as the other companies that have achieved that milestone. Wall Street will be looking for more details on the recently announced deal for Google to revamp Apple's AI features, including the Siri virtual assistant, with the search company's Gemini artificial intelligence models. The deal is one of the most prominent yet for Gemini as the scale of Apple's user base boasts 2.5 billion active devices. During the fourth quarter, Google made a number of notable announcements. In November, the company launched its Gemini 3 models to strong reviews. Google also rolled out the seventh generation of its tensor processing units, called Ironwood. And Alphabet's driverless car unit Waymo also began opening its robotaxi routes to freeways in three major U.S. cities, marking a major milestone for the ride-hailing company. Amin Vahdat, Google's AI infrastructure boss, told employees that the company has to double its serving capacity every six months in order to meet demand for AI services, CNBC reported in November. "The competition in AI infrastructure is the most critical and also the most expensive part of the AI race," Vahdat said. In December, Alphabet agreed to acquire data center company Intersect for $4.75 billion in cash and the assumption of debt. Since the start of the year, Alphabet has made more AI announcements, besides the deal with Apple. The earnings Wednesday will be Alphabet's first opportunity to touch on the announcements with investors. In January, the company launched an AI feature called "Personal Intelligence," which connects information from apps like Gmail and Google Photos to provide users personalized answers in the Gemini chatbot. Google also announced a protocol for AI shopping agents called Universal Commerce Protocol as the company tries to secure its position in AI-powered commerce, which has emerged as one of the major battlegrounds within consumer and business-facing AI. As part of a licensing agreement, Google DeepMind brought on the CEO and several of the top engineers at AI voice startup Hume AI, which it reportedly plans to use to improve Gemini's voice features. Earlier this week, Waymo said it raised a $16 billion funding round that values the company at $126 billion. The company ended 2025 having served 15 million trips in five major U.S. markets, including Austin, Atlanta, Los Angeles, Phoenix and the San Francisco Bay Area.

The AI investment surge is getting even bigger

The big picture: The AI investment surge that powered economic growth in 2025 looks likely to do even more so in 2026, based on guidance from four companies. * Alphabet, Amazon, Meta and Microsoft are together anticipating capital spending of around $650 billion this year, per Bloomberg's calculations, up from "only" $359 billion in 2025. A decade ago, that number was only $31 billion. * These numbers are staggering -- and don't even include the many other companies spending big on data centers, semiconductors, software development and the electricity infrastructure to power it all. State of play: For context, total U.S. nonresidential investment spending -- the money spent on every office building, factory, machinery and software deployment -- was running at a $4.3 trillion annual rate in the most recent reading. * So a small handful of hyperscalers are likely to account for a massive share of all investment this year. Between the lines: As a general rule, it's a bad idea to try to map the actions of any one company onto overall macroeconomic variables like GDP. The U.S. economy is just too big and sprawling for even the largest companies' actions to move the dial much. * For example, Walmart may be the biggest retailer by far, but its U.S. sales equate to only about 2% of total personal consumption expenditures. * The AI boom is looking like an exception, with a handful of companies deploying enough cash to move the dial on GDP, even beyond their major contribution in 2025. What they're saying: "Capex intentions by the large technology firms exceeded expectations for 2025 by an unusual order of magnitude," RSM chief economist Joe Brusuelas tells Axios. * "Should reality match planned outlays, this strongly implies upside risk to the consensus 2.2% estimate of GDP for the upcoming year." Reality check: It's not a simple matter of saying that every billion dollars a mega-cap tech company spends translates into an extra billion dollars of GDP. The effects are more complex. * The spending may be displacing other potential investments, both by pushing up borrowing costs and by claiming finite physical resources. A piece of land where a new data center is going up might instead be the site of a new warehouse, absent AI spending. * To the degree the investment relies on imported equipment, such as semiconductors from Taiwan, it creates an offsetting subtraction from growth. GDP aims to capture domestic output, so spending on imported goods is subtracted to make the arithmetic work. * Moreover, it is uncertain how much the AI investment spend will mean for job creation, as it is a highly capital-intensive pursuit but not very labor-intensive. The intrigue: Both AI investment itself and the returns it aims to generate across the economy imply a significant boost to productivity in the years ahead.

Big Tech's $630 billion AI spree now rivals Sweden's economy, unsettling investors: 'We've never invested this much on anything before' | Fortune

Texas governor Greg Abbott and Google CEO Sundar Pichai at the Google Midlothian Data Center in Midlothian, Texas.Jonathan Johnson -- Bloomberg/Getty Images During earnings calls this week, tech firms raised their capital expenditure projections. Google's parent company, Alphabet, said on Wednesday it plans to double capex spending in 2026 to nearly $185 billion. Amazon said Thursday it plans to spend a towering $200 billion in capex, well ahead of Wall Street estimates. Last week, Meta said full-year capex will rise to as much as $135 billion. Those firms' spending, along with Microsoft's growing projections, totals more than a staggering $630 billion. And Big Tech is putting all of its eggs in one basket: Not only are the dollars dramatically higher, but the spend is more concentrated in a single purpose -- scaling AI compute -- rather than in a mix of strategic bets. The amount companies are spending on AI infrastructure now rivals that of some of the largest economies in the world and is comparable to the annual GDP of countries like Sweden and Israel. Capital expenditure, or capex, is the funding behind big-ticket infrastructure items like data centers, servers, and power systems that fuel the AI buildout race. Those centers -- some expected to be the size of a football field, or even four times the size of Central Park in Manhattan -- require massive resources and energy to build, maintain, and operate. "We've never invested this much in anything before," Gil Luria, managing director and head of technology research at financial services firm D.A. Davidson, told Fortune. "But we've also never had a technology this promising before." As firms invest in physical data center infrastructure, some experts say the next round of buildouts could reach your town. "I firmly believe that the 'Stranger Things' mall where they battle the creature will be converted to a data center," Brent Thill, an analyst at investment banking firm Jefferies, told Fortune. The magnitude of the current AI buildout is unlike any other investment in history. However, Luria said the capex simply reflects existing demand. "It's an unprecedented buildout," Luria said. "But it's really being done in conjunction with the growth in demand." Luria points out that the demand backlog for Amazon, Meta, and Microsoft has reached new highs. Microsoft's backlog, or the accumulation of orders the firm has accepted but not yet fulfilled, has doubled to $625 million thanks to OpenAI. Thill said the buildout is addressing the AI industry's existing bottleneck: physical infrastructure. He said the bottleneck has shifted from chips to energy, and now, it's the physical shells that are lacking. "It went from a chip shortage, a GPU shortage," Thill said. "Now, it's a physical shell shortage." But as firms throw cash on AI infrastructure, it's triggered a wariness of software valuations, causing a massive weeklong selloff of tech stocks and cryptocurrency as AI advancements cast doubts on the relevance of software technology. Although firms are bullish on AI's potential, the technology has not yet paid off, and investors are reacting to uncertainty about its actual value. Coupled with weak jobs data, investor AI jitters spurred a wipeout of nearly $1 trillion from software and services stocks. But not everyone is concerned, including Nvidia CEO Jensen Huang, who has brushed off demands for short-term ROI. Still, investors in tech giants are growing nervous because these firms are essentially exhausting their available capital to fund the infrastructure buildout, according to Luria. He said shareholders want to see returns, not added investment. "'We understand that you want to invest all this money, but you're investing all our money, you're taking all your cash and all your cash flow and investing it,'" Luria said of the shareholder mindset. Despite the selloff, Big Tech is betting on high ROI from AI. "We're in a game of leapfrog now," Thill said. "You have three to four big public vendors that are all lined up for this prize." As to why the buildout is taking off, Thill said that, given today's demand for AI data centers, the only concern among tech firms is the risk of not doing enough. Any overbuild would grant some payoff. "Even if you overbuild," Thill said, "there's so many people that would buy that overbuild even if they couldn't sell it to their clients. Other people would want to procure it: state, local governments, [and] federal governments."

Big Tech's AI spending spree: $650 billion in 1 year

Amazon $AMZN CEO Andy Jassy (Michael Nagle/Bloomberg via Getty Images) Earnings releases from just four companies competing to win the future of AI have revealed something predicted and yet still startling: Capital expenditures on the AI arms race are set to break records. They may even be propping up the entire U.S. economy. Amazon $AMZN's earnings release on Thursday, after the market close, proved the high-water mark of recent capex announcements -- with Amazon forecasting a whopping $200 billion spend just by itself. "With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026," Amazon CEO Andy Jassy said in the release, "and anticipate strong long-term return on invested capital." Amazon spent about $130 billion on AI investments in 2025. This amount of concentrated corporate spending is essentially unprecedented in modern economic history, experts say, even accounting for the telecom boom of the 1990s and the construction of railroads circa the 1840s and 1850s. The sheer amount, the concentration of companies, and speed of the spending will likely all break records. Past booms saw capital expenditures spread across many more companies and many more years. During the 1990s telecom boom, for instance, peak annual spending hit roughly $200 billion, adjusted for inflation, across dozens of companies. This year, just four tech giants are projecting more than three times that amount. The $650 billion also marks an increase of roughly 60% over these companies' spending in 2025, which totaled about $400 billion -- even as 2025 marked an almost 50% increase over these companies' 2024 investments, which totaled about $240 billion. "In the first half of 2025, AI-related capital expenditures contributed 1.1% to GDP growth," JPMorgan $JPM strategist Stephanie Alliaga noted, "outpacing the U.S. consumer as an engine of expansion."

Here's how much Amazon, Microsoft, Meta, and Google will spend to develop more AI in 2026

Big Tech is set for a big spend, with the number reaching into the hundreds of billions, according to earnings reports this week. Big Tech is on a spending spree, forecast to drop a staggering $650 billion on artificial intelligence (AI) in 2026 alone -- and that's just for Alphabet, Meta, Microsoft, and Amazon. The companies are ramping up their investment in an increasingly competitive, high-stakes arms race, pouring hundreds of billions into massive data centers and semiconductors, in hopes of establishing a long-term strategic advantage in their quest to dominate the future of technology.

Big tech races to fund its trillion-dollar spending spree

Big Tech companies will have to raise tens of billions of dollars to fund their skyrocketing investments in artificial intelligence this year, as capital spending outpaces cash flows even among some of the world's most profitable companies. Google's parent Alphabet, Amazon and Meta all surprised investors with the scale of their AI spending plans over the past two weeks. A total of more than $660 billion is set to be ploughed into chips and data centres this year as they race to dominate what many in Silicon Valley believe will be the biggest wave of innovation since the internet.

Google Hits Historic $400B Revenue as AI Bet Pays Off: 5 Things to Know

Gemini 3 Pro is said to be witnessing 3X daily usage as its predecessor Google, on Wednesday, announced the quarterly financial results for Q4 2025. During the earnings call with investors and analysts, company CEO Sundar Pichai revealed that Google's parent Alphabet crossed $400 billion (roughly Rs. 36.07 lakh crore) in annual revenue for the first time. The massive revenue milestone comes on the back of the company's massive push into artificial intelligence (AI) technology, and increased demand from consumers and enterprises. For the specific quarter, Pichai said the release of the Gemini 3 AI model was a major milestone. Here are the top five takeaways from the earnings call. Google Q4 2025 By Numbers In the fourth quarter of 2025, Google's overall revenue was recorded at $113.8 billion (roughly Rs. 10.26 lakh crore), with a growth of 18 percent year-on-year (YoY), the company said in a blog post. Breaking it down, the Google CEO said that revenue from Search grew by 17 percent YoY, whereas YouTube's annual revenue crossed $60 billion (roughly Rs. 5.41 lakh crore) across ads and subscriptions. The company also stated that it has amassed 325 million paid subscriptions across consumer services and has seen strong adoption for Google and YouTube Premium. Pichai also revealed that Google sold more than eight million paid seats of Gemini Enterprise in this quarter. Notably, the offering was launched four months ago, highlighting its strong adoption. The company expected its 2026 capital expenditure (CapEx) to be between $175 billion (roughly Rs. 15.78 lakh crore) and $185 billion (roughly Rs. 16.68 lakh crore). Gemini Continues to Be a Major Revenue Driver During the earnings call, Pichai revealed that the launch of the Gemini 3 AI model was a major milestone for the company in the fourth quarter of the previous year. Additionally, the CEO said that the Gemini app now has more than 750 million monthly active users (MAUs). "We are also seeing significantly higher engagement per user, especially since the launch of Gemini 3 in December," he added. Notably, Pichai said that Gemini 3 Pro has processed an average of three times as many daily tokens as Gemini 2.5 Pro, its predecessor. Gemini-powered development platform Google Antigravity, which was also launched in Q4 2025, now has more than 1.5 million weekly active users, the CEO said. Google's Full-Stack AI Infrastructure Enables Cost Optimisation Ever since the start of the AI race, Google has leveraged its full-stack infrastructure. The company has its own data centres powered by in-house tensor chipsets, builds its own models, and distributes the AI features via its enterprise offerings, Android ecosystem, and Pixel devices. During the earnings call, Pichai said that the tech giant has expanded its compute options by securing Nvidia's Vera Rubin GPUs alongside its own TPUs. "In December, we announced our intent to acquire Intersect, which provides data centre and energy infrastructure solutions," he added. Google said that it was able to lower Gemini serving unit costs by 78 percent in 2025 via model optimisations, efficiency, and utilisation improvements. YouTube Remains Major Revenue Contributor With more than $60 billion (roughly Rs. 5.41 lakh crore) in annual revenue, YouTube is consolidating its position in the video streaming market. While the CEO did not share subscription numbers, he said, "We continue to see strong subscription revenue growth across YouTube, particularly YouTube Music Premium." The company also confirmed that it will soon launch new YouTube TV plans, with options for 10 genre-specific packages. Highlighting the popularity of the platform when it comes to podcast consumption, Pichai mentioned that in October 2025, viewers watched more than 700 million hours of podcasts on living room devices, marking a growth of 75 percent YoY. AI features on the platform are also witnessing a strong adoption. The CEO mentioned that more than 20 million viewers used the new Gemini-powered Ask tool in October to learn more about the content they watched. Focus on Google Cloud The Google CEO revealed that its cloud services witnessed growth in revenue, operating margin, and backlog in Q4 2025. Google Cloud is said to have forged deals worth more than $1 billion (roughly Rs. 9,018 crore) in 2025, which is more than the combined deals forged in the previous three years. "Nearly 75 percent of Google Cloud customers have used our vertically optimised AI[..]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," Pichai said. Additionally, Pichai revealed that Gemini Enterprise managed more than five billion customer interactions in Q4, growing 65 percent YoY. During the same period, revenue from AI solutions built by the company's partners also increased nearly 300 percent YoY, resulting in commitments from the top 15 software partners growing 16X YoY.

Big Tech's $600 billion spending plans exacerbate investors' AI headache

Other heavyweight technology companies, however, were trading higher: Nvidia rose 7%, Microsoft gained 1% and Tesla was up 4%. The benchmark S&P 500 added 1.6% while the Nasdaq rose 2% although both indexes are set to finish the week lower. A planned $600 billion artificial intelligence spending splurge by big tech firms in 2026 is ⁠adding to investor unease as they assess the implications for profitability as well as a potential existential threat to software firms. Shares of Amazon, which had announced a $200 billion capital expenditure outlay, slid 7% on Friday, while Alphabet lost 3% after the company said on Wednesday that capital spending could double this year. Meta Platforms was down 1.3%. Other heavyweight technology companies, however, were trading higher: Nvidia rose 7%, Microsoft gained 1% and Tesla was up 4%. The benchmark S&P 500 added 1.6% while the Nasdaq rose 2% although both indexes are set to finish the week lower. "The market's viewpoint is that the AI build-out trade, and the way they've pulled forward all these earnings for many, many years, we think that's just got too pricey," said Andrew Wells, chief investment officer at SanJac Alpha in Houston. "It's not that the trade is over, but it got too pricey in pulling forward all these potential future revenues and not really pricing in the risk into all that. So it's a de-risking trade." Nvidia CEO Jensen Huang attributed the uptick in spending to "sky-high" demand. Speaking on CNBC's "Halftime Report", he called the rise appropriate and sustainable. Meanwhile, the equities of data analytics firms continued to come under selling pressure on concerns that they face an existential threat from powerful new AI models. Canada-based Thomson Reuters , which suffered a record one-day plunge earlier this week, was down 0.7%. London-listed RELX's shares lost 4.6% and notched a 17% tumble in their worst week since 2020. The S&P 500 software and services index has fallen almost 8% this week and has seen around $1 trillion in market value evaporate since January 28. "Headlines that would have pushed shares to fresh highs during the peak of AI optimism are now being interpreted far more cautiously by investors," said Carlota Estragues Lopez, equity strategist at St. James's Place in London. "It's not just return-on-investment that worries investors, but also the risk of narrow market leadership that struggles to broaden beyond a handful of mega-cap names." Jolt to data analytics firms A selloff in software and data and analytics firms was triggered by a new plug-in from Anthropic's Claude. Shares in London Stock Exchange Group clawed back some ground on Friday, but their price was still down almost 8% for the week in a second straight week of sharp losses. This week's drawdown in AI-exposed shares ⁠has weighed on broader equity markets. Global ⁠shares are on track to ease 0.33% for the week. The rout has been particularly acute in India, where shares of software exporters plunged another 2% on Friday as they ended a week that has seen $22.5 billion in market value losses. Investor nerves over potential AI-driven disruption are coinciding with a growing tendency to punish big tech firms for signaling even heavier spending on the technology. Google parent Alphabet also upped its spending plans on Thursday, sending its shares as much as 8% lower at one point, although they ended the day flat. "Both Alphabet and Amazon delivered strong underlying business performance, driven by better-than-expected growth in cloud. But that hasn't been enough to distract markets from their ballooning capital investment plans," said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

Alphabet CEO Sundar Pichai Says AI Capacity Is What 'Keeps Us Up At Night' As Power, Land And Supply Chain Limits Test Growth - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

On Wednesday, during Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) fourth-quarter earnings call, CEO Sundar Pichai said meeting surging AI demand has become the company's biggest near-term challenge. AI Demand Is Rising Faster Than Capacity Responding to an analyst question about what concerns leadership most at this stage of Google's evolution, Pichai said the company's long-standing "AI-first" strategy is now colliding with real-world constraints. "What keeps us up at night... We've been on this AI-first trajectory for over a decade," Pichai said, pointing to years of investments in custom chips like tensor processing units, or TPUs. However, he added that the current moment presents a unique challenge. "The top question is definitely around capacity," Pichai said. "All constraints -- bet it power, land, supply chain constraints -- how do you ramp up to meet this extraordinary demand for this moment?" Power, Land And Supply Chains Emerge As Key Bottlenecks Pichai said Google is spending significant time ensuring it can scale infrastructure responsibly while maintaining efficiency, a balancing act as data center expansion becomes more complex and expensive. The comments reflect a broader industry struggle as tech giants race to deploy AI models that require massive computing resources. Power availability, data center locations and equipment sourcing have increasingly become limiting factors for growth across the sector. Pichai said the company is focused on making the right long-term investments without sacrificing operational discipline. "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," he said, noting that this is where much of his attention is currently focused. Alphabet Beats Q4 Revenue Estimates Alphabet posted fourth-quarter revenue of $113.83 billion, topping the Street's consensus estimate of $111.31 billion, according to Benzinga Pro data. Revenue rose 18% from a year earlier, supported by double-digit growth across all business segments. Looking ahead, the company said 2026 capital expenditures are expected to range between $175 billion and $185 billion, with the bulk of spending aimed at expanding AI computing capacity, strengthening technical infrastructure and supporting cloud growth. Price Action: Alphabet shares closed lower Tuesday, with Class A stock falling 1.96% to $333.04 and Class C shares dropping 2.16% to $333.34, while both ticked down about 0.4% in after-hours trading, according to Benzinga Pro. GOOG shows a stronger price trend across the short, medium and long term, though the stock carries a weak value ranking, according to Benzinga's Edge Stock Rankings. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo Courtesy: MNAphotography on Shutterstock.com Market News and Data brought to you by Benzinga APIs

Alphabet (GOOGL) Q4 2025 Earnings Call Transcript | The Motley Fool

AI Compute Capacity Constraints -- CEO Pichai said, "I do to go through the year in a supply constrained way," indicating persistent compute and infrastructure limitations may impact ability to fully capitalize on demand. Alphabet (GOOGL 1.89%) delivered record revenues, accelerated margin expansion in cloud, and materially increased operating and free cash flow. Management asserted AI-driven efficiency and adoption are driving unit economics improvement, with Gemini model usage and customer commitments reaching new highs. Newly announced Apple and Reliance Jio partnerships further extend Gemini's technological and commercial reach, and CapEx guidance signals a continued scaling of technical infrastructure. Product launches, including Gemini 3 and Universal Commerce Protocol, are designed to monetize emerging behaviors in search and agentic commerce across global platforms. Sundar Pichai: Thanks, Jim. Hi, everyone. Thanks for joining us. It was a tremendous quarter for Alphabet. The launch of Gemini 3 was a major milestone, and we have great momentum. Alphabet annual revenues exceeded $400 billion for the first time. This quarter, Search continued to accelerate with revenues growing 17%, YouTube's annual revenues surpassed $60 billion across ads and subscriptions. Cloud significantly accelerated with revenues growing 48% now on an annual run rate of over $70 billion. Backlog grew by 55% quarter over quarter to $240 billion representing a wide breadth of customers driven by demand for AI products. We have over 325 million paid subscriptions across consumer services, strong adoption for Google One and YouTube Premium. In addition, we have sold more than 8 million paid seats of Gemini Enterprise, we launched just four months ago. And our Gemini app now has over 750 million monthly active users. We are also seeing significantly higher engagement per user especially since the launch of Gemini 3 in December. Overall, we are seeing our AI investments and infrastructure drive revenue and growth across the board to meet customer demand and cap on the growing opportunities ahead of us, our 2026 CapEx investments are anticipated to be in the range of $175 to $185 billion. Today, I'll provide an update on our AI progress and then share highlights from Search, Cloud, YouTube, and Waymo. First, AI progress across the full stack. Our unrivaled infrastructure serves as the bedrock of our AI stack. 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 their latest Vera Rubin GPU platform. Plus our own TPUs that we have been developing for a decade. In December, we announced our intent to acquire Intersect which provides data center and energy infrastructure solutions. As we scale, we are getting dramatically more efficient. We were able to lower Gemini serving unit costs by 78% over 2025 through model optimizations, efficiency, and utilization improvements. Next, world-class AI research including models and tooling. We offer the most extensive model portfolio in the world, and lead across text, vision, and image to video LM Arena leaderboards. Gemini 3 Pro drives the state of the art in reasoning and multimodal understanding. It has seen the fastest adoption of any model in our history. Since launch, Gemini 3 Pro has consistently processed three times as many daily tokens on average as 2.5 Pro. Our latest model powers Google Anti Gravity, our new development platform where agents can autonomously plan and execute complex software tasks. It already has more than 1.5 million weekly 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. Third, bringing AI to our products and platforms. We are shipping innovation at scale to bring helpful AI features to people everywhere. In January alone, we have launched personal intelligence in AI mode in search and the Gemini app. Introduced new features to Gmail and updated Vio. Reimagine Chrome as an AI-first agentic browser through features like Chrome Autobrowse. Announced Project Genie, which lets users create and explore interact worlds generated in real-time using Genie 3, our general-purpose world model. And we laid the groundwork for shopping in the AI era by introducing a new open standard for agentic commerce. The Universal Commerce Protocol built alongside many retail industry leaders. Finally, from Android to Pixel, we are getting our best AI capabilities into People's hands. At CES, a range of partners, including Samsung, showcased how they are bringing Gemini to more devices from XR to the living room and beyond. And to confirm the rumors, we'll be introducing our Pixel 10a to our best-ever rated Pixel 10 series very soon. Turning now key highlights from the quarter, starting with Search. Search saw more usage in Q4 than ever before, as AI continues to drive an expansionary moment. We have executed with incredible speed, We shipped over 250 product launches, within AI mode and AI overviews just last quarter. We have integrated Gemini 3 directly into AI mode and search. Now Search can better understand your query, dive deeper on the web, and generate interactive UI experiences. And last week, we upgraded AI overviews to Gemini 3 giving users a best-in-class AI response at the top of the search results page. We have also made the search experience more cohesive ensuring the transition from an AI overview to a conversation in AI mode is completely seamless. These new experiences are proving to be more helpful and are driving greater usage. A few highlights. First, once people start using these new experiences, they use them more. In The US, we saw daily AI mode queries per user double since launch and AI overviews continue to perform very well. Second, people are engaging in longer, more complex sessions. Queries in AI mode are three times longer than traditional searches. We are also seeing sessions become more conversational, with a significant portion of queries in AI mode, now leading to a follow-up question. Third, people are searching in new ways beyond text. Nearly one in six AI mode queries are now non-text using voice or images. And Circle to Search is now available on over 580 million Android devices. Next, Google Cloud. Our growth in revenue, operating margin, and backlog highlights the strength of our entire portfolio. One, we are winning more new customers faster. We exited the year with double the new customer velocity compared to Q1. Two, we are also signing larger customer commitments. The number of deals in 2025 over $1 billion surpassed the previous three years combined. And three, we continue to deepen our relationships with existing customers who are outpacing their initial commitments by over 30%. Nearly 75% of Google Cloud customers have used our vertically optimized AI, from chips to models to AI platforms and enterprise AI agents, offer superior performance quality, security, and cost efficiency. 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. Our product line has multiple monetization levers spanning infrastructure, platform, and high-margin AI-powered products and services with 14 product lines each exceeding $1 billion in annual revenue. 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. Our ten-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. Our Cloud AI accelerators serve the leading frontier AI labs. Capital markets firms like Citadel Securities, enterprises like Mercedes Benz, and governments for high-performance computing applications. We also offer our leading generative AI models including Gemini, Imagine, Vio, Chirp, and Liria to cloud customers. December alone, nearly 350 customers each process more than 100 billion tokens. In Q4, revenue from products built on our generative AI models grew nearly 400% year over year. Significantly accelerating from the prior quarter. Today, more than 120,000 enterprises use Gemini, including AI unicorns like Lovable and Open Evidence. And global enterprises like Airbus and Honeywell. 95% of the top 20 and over 80% of the top 100 SaaS companies use Gemini, including sales and Shopify. Gemini is becoming the AI engine for the world's most successful software companies. Leading enterprises are also driving strong demand for our enterprise AI agents. We have sold more than 8 million paid seats of Gemini Enterprise our enterprise AI platform, to more than 2,800 companies including BNY and Virgin Voyages. To streamline knowledge management and automate processes. Gemini Enterprise managed over 5 billion customer interactions in Q4, growing 65% year over year. For customers, including Wendy's, Kroger, and Woolworths Group. Our integration of Gemini and Google Works is driving wins with global brands like Schwartz Group and public sector organizations like the U. S. Department of Transportation. We are also seeing momentum with independent software vendors. Revenue from AI solutions built by our partners increased nearly 300% year over year, and commitments from our top 15 software partners grew more than 16x year over year. Before moving on, I'm pleased that we are collaborating with Apple as their preferred cloud provider and to develop the next generation of Apple Foundation models based on Gemini technology. Up next, YouTube. I want to highlight four points. First, streaming. In the living room, YouTube continues to be the number one streamer in The US. For nearly three years, according to Nielsen. From the NFL to Coachella, YouTube is where people watch today's biggest popular culture moments unfold. Second, subscriptions. We continue to see strong subscription revenue growth across YouTube. Particularly YouTube Music Premium. We'll soon launch new YouTube TV plans bringing more choice and flexibility to subscribers. With over 10 genre-specific packages. The NFL has seen strong NFL Sunday Ticket subscriber growth with YouTube. With the highest paid subscriber number ever in the history of the product. Third, podcast. To illustrate YouTube's popularity, in October 2025, viewers watched over 700 million hours of podcasts on living room devices, up 75% from just a year prior. And fourth, AI is transforming the YouTube experience for both creators and viewers. On average, every day in December, over 1 million channels used our new AI creation tools to supercharge their creativity. During that same month, more than 20 million viewers used our new tool powered by Gemini to learn more about the content they watched. And finally, Waymo, This week, Waymo raised its largest investment round to date and is well positioned to continue its momentum with safety at the core. In December, we surpassed 20 million fully autonomous trips and are now providing more than 400,000 rides every week. Waymo continues to expand its service territory. Its sixth market, Miami, launched two weeks ago and Waymo will soon expand its service to multiple cities across The U. S. And in The UK and Japan. The team has made incredible progress on important capabilities, including opening up public service to airports and freeways. In closing, 2025 was a fantastic year for the company a big thanks to our employees and partners worldwide. We are really well positioned going into 2026. Now, over to Philip. Thanks, Sundar, and hello, everyone. I'll cover performance for Google services for the quarter, then structure the rest of my remarks around the great progress we're delivering across search, YouTube, and partnerships. Google services revenues were $96 billion for the quarter, up 14% year on year, primarily driven by accelerated growth in search. Adding some further color to our results. The 17% increase in search and other was led by broad strength across all major verticals. With retail particularly strong. On YouTube, the 9% growth in advertising revenues was driven by direct response. Network advertising revenues were down 2% year on year this quarter. Starting with Search and Other revenues, which delivered over $63 billion in revenue for the quarter. Sundar mentioned the expansionary moment for Search. The same is true for ads. We're investing in AI to drive significant improvements across all areas of marketing. We're expanding the entire playing field that advertisers can compete on. AI gives businesses the ability to reach more customers in more places than ever before. Gemini uniquely positions us to bring the transformational benefits of AI to ads in three critical areas for our customers. Ads quality, advertiser tools, and new AI user experiences. First, ads quality. We've been deploying Gemini models to improve query understanding at a rate of almost a launch per month for the last two years. These improvements drive better query matching, ranking, and quality making search ads even more effective. With Gemini across our ads quality stack, we evaluate relevance with greater accuracy than with previous generations of models. This has significantly improved our ability to systematically deliver more helpful high-quality ads contributing to a meaningful reduction in irrelevant ads served. Gemini's understanding of intent has increased our ability to deliver ads on longer, more complex searches that were previously challenging to monetize. Gemini models also have a significant impact on query understanding in non-English languages, expanding opportunities for businesses to scale globally. Second, we're building more agentic actions into our advertiser tools. Business can now leverage Gemini in conversational experiences within ads and analytics Advisor to identify and run recommended such as generating new campaigns. Advertisers use Gemini as a real-time partner to assemble creatives. In Q4 alone, they use Gemini to create nearly 70 million creative assets via text customization in AI Max and PMax. For instance, Aritzia, Canada's premier fashion house, used AI Max to find new high-value customers that traditional strategies miss, delivering an 80% incremental uplift in conversion value for Q4. L'Oreal, one of the first alpha testers, used AI Max 2025 across 800 unique campaigns in 23 countries and 30 brands. AI Max enabled the L'Oreal Group to maximize its presence across the full consumer journey, fuel its consumer growth, and increase revenue for DTC brands like Nick's by 23%. Third area is how we monetize new AI user experiences in search. We have significantly increased our focus on AI mode and are in the early stages experimenting with AI mode monetization, like testing ads below the AI response, with more underway. For example, we announced direct offers in new Google Ads pilot which will allow advertisers to show exclusive offers for shoppers who are ready to buy directly in AI mode. This new type sponsored content uses AI to match the right offer provided by the retailer to the right user. As Sundar mentioned, we are building the era of agenda commerce and working with partners to introduce the universal commerce protocol in our consumer products and across the web. We've received tremendous feedback from the industry. Soon, people can use a new checkout experience to buy directly in AI mode in Gemini from select merchants. Turning now to YouTube, which remains the number one streamer in The US for nearly three years according to Nielsen. YouTube creators are providing an unmatched breadth of content. Our investment in AI innovation across creativity, viewing experience, and monetization continues to pay off. We're seeing strong traction in our subscription business, our innovating to meet consumers where they are. We added a new sports tier for YouTube TV at a lower price point. YouTube Premium Lite is proving to be a popular choice. And we continue to deliver strong year on year growth across YouTube subscriptions particularly YouTube Music and Premium. Looking at monetization across YouTube, momentum continues in Shorts and the living room. Shorts now averages over 200 billion daily views. And as we've shared before, in a number of countries, Shorts earns more revenue per watch hour than traditional in-stream on YouTube, including The US. The retail vertical continues to grow fueled by smaller advertisers increasingly adopting demand gen. Likewise, direct response continues to benefit from the momentum we're seeing with small and medium-sized advertisers. Viewers trust product and brand recommendations from YouTube creators, and we're focused on making YouTube a premier shopping destination. Innovations like shoppable ad formats are improving advertiser return on investment. During Cyber five, advertisers piloted shoppable mass eads, a new interactive ad format where viewers browse products and send links to their phones for an easy shopping experience. On brands, our creator partnership hub makes it easier for brands to find creators and develop campaigns. This holiday season, brands like JCPenney, Old Navy, and Target work with creators for their holiday campaigns. Mattel partnered with eight top YouTube creators to reach families during the peak holiday shopping season in a campaign that helped drive a 25% increase in search volume for UNO. As always, I wrap with the progress we're seeing across partnerships. Where customers tap into the strength and breadth of Google's products to accelerate their transformation. I would start by joining Sundar and saying hope pleased I am that we are collaborating with Apple as their preferred cloud provider and to develop the next generation of Apple foundation models based on Gemini technology. We partnered with Reliance Jio to provide over 500 million consumers with an eighteen-month free trial of our Gemini suite of products and two terabyte of cloud storage. Reliance Enterprise customers will also get access to Google Cloud Gemini Enterprise and TPUs, bringing the best of Google AI to every employee and workflow. The Home Depot is applying Google AI across the board from cloud tools to AI-powered ads and YouTube creator partnerships that connect with the next generation of Duos. Their investments in PMax and YouTube creator partnerships have resulted in double-digit increase in ad clicks and visits. In closing, I'd like to thank Googlers everywhere for their contributions to our success and, as always, to our customers and partners for their continued trust. Anat, over to you. Anat Ashkenazi: Thank you, Philip. My comments will focus on year-over-year comparisons for the fourth quarter unless they state otherwise. I will start with results at the Alphabet level and will then cover segment results. I'll end with some commentary on our outlook for the first quarter and full year 2026. 2025 was a strong year of innovation and execution for Alphabet. These efforts, combined with our investments in AI, drove meaningful results across the business. For the full year 2025, Alphabet consolidated revenues were $403 billion up 15% on a reported and constant currency basis. Moving to Q4 performance, we delivered strong growth in the fourth quarter. Consolidated revenues reached $113.8 billion up 818%, or 17% in constant currency and was driven by an acceleration in Search and Cloud revenues. Turning to costs and expenses. We reported $2.1 billion stock-based compensation charge due to increase in Waymo's valuation related to the investment round that was announced on Monday. The vast majority of the charge was reflected in R and D expenses. Total cost of revenue was $45.8 billion up 13%. Tech was $16.6 billion up 12%. Other cost of revenues was $29.2 billion up 13% with the increase primarily driven by depreciation associated with the deployment of our technical infrastructure content acquisition costs largely for YouTube and other technical infrastructure operations costs. Total operating expenses were up 29% to $32.1 billion R and D expense increased by 42% driven by compensation and depreciation. The increase in compensation was due to the Waymo charge and investment in AI talent. Sales and marketing expenses were up 12% primarily driven by marketing investments to support the Gemini app and search. And G and A expenses increased 21% primarily due to a shift in timing of our charitable contributions. Operating income increased 16% to $35.9 billion and operating margin was 31.6%. Both operating income and operating margin were negatively by the $2.1 billion Waymo charge in the quarter. Other income and expenses was $3.2 billion primarily due to unrealized gains in our non-marketable equity securities portfolio. Net income increased 30% to $34.5 billion and earnings per share increased 31% to $2.82. We generated record operating cash flow of $52.4 billion in the fourth quarter and $160.5 billion for the full year. This translated into $24.6 billion of free cash flow in the fourth quarter and $73.3 billion for the full year. We ended the quarter with $120.8 billion in cash and marketable securities and $46.5 billion in long-term debt. Turning to segment results. Google services revenues increased 14% to $95.9 billion reflecting strong growth in search and subscriptions. Google Search and other advertising revenues increased by 17% to $63.1 billion representing another strong quarter with continued growth across all major verticals with the largest contribution from retail. YouTube advertising revenues increased 9% to $11.4 billion driven by direct response advertising. Results were negatively affected from the lapping of the strong spend on U. S. Election in the 2024 that we've mentioned on previous earnings calls. Network advertising revenues of $7.8 billion were down 2%. Subscription, platforms, and devices revenues increased 17% this quarter to $13.6 billion due to strong growth in YouTube subscriptions, particularly YouTube Music and Premium and growth in Google One benefited from increased demand for AI plans. Google services operating income increased 22% to $40.1 billion and operating margin was 41.9%. The Google Cloud segment delivered outstanding results in the fourth quarter as the business continued to benefit from strong demand for enterprise AI products. Cloud revenue accelerated meaningfully and were up 48% to $17.7 billion. Revenues were driven by strong performance in GCP which continued to grow at a rate that was much higher than cloud's overall revenue growth rate. As Sundar noted, we're driving performance through strong growth in the win rate of new customers, signing larger customer commitments, and increasing spend with existing customers. GCP's performance was driven by accelerating growth in enterprise AI products which are generating billions in quarterly revenues. We had strong growth in both enterprise AI infrastructure driven by deployment of TPUs and GPUs and enterprise AI solutions which benefited from demand for industry-leading models. Including Gemini 3. Core GCP was also a meaningful contributor to growth due to strong demand for infrastructure and other services, such as cybersecurity and data analytics. We also had double-digit growth in Workspace, driven by an increase in average revenue per seats and the number of seats. Cloud operating income was $5.3 billion more than doubling year over year. And operating margin increased from 17.5% in the fourth quarter of last year to 30.1%. Google Cloud's backlog increased 55% sequentially and more than doubled year over year, reaching $240 billion at the end of the fourth quarter. The increase in backlog was driven by strong demand for our cloud products led by our enterprise AI offerings, from multiple customers. In Other Bets revenues were $370 million and operating loss was $3.6 billion reflecting the $2.1 billion Waymo charge I mentioned earlier. We allocate resources in Other Bets to businesses like Waymo where we see meaningful opportunities to create value. Alphabet funded a significant portion of the $16 billion investment round that Waymo announced on Monday, which will allow the business to accelerate its global expansion. CapEx was $27.9 billion for the fourth quarter, and $91.4 billion for the full year. In line with our expectation. The vast majority of our CapEx was invested in technical infrastructure approximately 60% of that investment in servers, and 40% in data centers and networking equipment. In Q4, we returned capital to shareholders through $5.5 billion share repurchase, and $2.5 billion of dividend payments. Turning to our outlook, I would like to provide some commentary on factors that will impact our business performance in the first quarter and full year 2026. First, in terms of revenues, we're pleased with the overall momentum of the business. At current spot rates, we would expect to see an FX tailwind to our consolidated revenues in Q1. However, the volatility in exchange rates could affect the impact of FX on Q1 revenues. In Google services, we expect growth to be driven by ongoing in the user experience as well as improved ROI for advertisers. Keeping in mind the normal seasonal pattern for advertising revenue. In Google Cloud, we're seeing significant demand for our products and services. Which we expect to continue to drive strong growth despite the tight supply environment we're operating in. Moving to investments. The investments we have been making in AI are already translating into strong performance across the business as you've seen in our financial results. Our successful execution coupled with strong performance reinforces our conviction to make the investments required to further capitalize on the AI opportunity. For the full year 2026, we expect CapEx to be in the range of $175 billion to $185 billion with investments ramping over the course of the year. We're investing in AI compute capacity to support frontier model development by Google DeepMind, ongoing efforts to improve the user experience and drive higher advertiser ROI in Google services significant cloud customer demand, as well as strategic investments in Other Bets. Keep in mind that the availability of supply, pricing of components, and timing of cash payments can cause some variability in the reported CapEx number. In terms of expenses, as we've discussed on previous calls, the significant increase in our investments in technical infrastructure will continue to put pressure on the P and L in the form of higher depreciation expense and related data centers operations costs such as energy. In 2025, depreciation increased by nearly billion dollars or 38% from $15.3 billion in 2024 to $21.1 billion in 2025. Given the increase in our CapEx investments in recent years, we expect the growth rate in 2026 depreciation to accelerate in Q1 and meaningfully increase for the full year. We're also planning to continue hiring in key investment areas such as AI and cloud. In 2025, our teams delivered amazing innovation, executing with a high level of discipline and velocity. These efforts provide great experiences for consumers and outstanding performance for creators, partners, and enterprise customers, driving strong revenue growth. I want to take this opportunity to thank our employees for their contribution to this impressive performance. Now Sundar, Philip and I will take your questions. Jim Friedland: Thank you. As a reminder, to ask a question, you will need to press And your first question comes from Brian Nowak with Morgan Stanley. Your line is now open. Brian Nowak: Thanks for taking my questions. I have two, one on AgenTeq. One on YouTube. The first one on AgenTek, Sundar, I'd be curious to hear about you look back at 2025, do you think you made the most progress on new types of agentic commerce products? And then looking into '26, you most optimistic to sort of have even more progress in utility for users and your advertisers? And the second one is on YouTube. You know, we've seen a lot of the new content creation models like Genie, etcetera. Walk us through sort of the alphabet long term vision for how Genie and some of these content creation tools be integrated into YouTube over time? Sundar Pichai: Great. Thanks, Brian. First, maybe I'll take the agentic part first. I definitely think '25 was more about laying the foundation getting the models to start being more robust in agentic use cases. And obviously, coding is an area where progress was the most felt in areas like commerce, think we spent the year working with the ecosystem to develop the underlying protocol that's going to be needed for this agentic world. So I think the launch of, universal Commerce protocol at NRF in January with a bunch of partners, founding partners, I think has been super well received. So I'm excited now that we've laid the foundation of interoperability on which agent e commerce can work. And now we are integrating those experiences into Gemini AI mode and so on. So I think this is the year where you will see consumers actually being able to use all of this, and I'm excited that about the opportunity ahead. On YouTube, look, super excited by Jeannie and blown away by spent a lot of time creating these incredible worlds. I think it's going to have a wide level of applicability. I think an area where we shine in general is multimodality and representing the real world. And I think Genie is a further step in that direction in terms of building world models. All the innovation we are doing be it our Imagine Veo, Liria, Genie, all that work we bring in into our products and to our cloud customers. And YouTube is going to be a natural place for creators. We are going to keep incorporating these tools already creators are responding by adopting these, but we do want to put creators at the center of the experience and that's very, very important to us. And so it's for us making sure YouTube is a voice for creator expression is the foundation by which we will approach this. Brian Nowak: Great. Thanks, Sundar. Jim Friedland: Your next question comes from Eric Sheridan with Goldman Sachs. Your line is now open. Eric Sheridan: Thanks so much for taking the question. Two, if I could. Over the last couple of earnings calls, we've talked a lot about imbalances between demand and capacity for AI. Both internally and externally. With the step function change in app capital dollars you're projecting now in twenty six, Can you talk about the pathway to closing the gaps for the need for compute both internally and externally, and how to think about some of the outputs of closing that gap? As the year progresses. And again, the second part would be against that level of spend that you're now projecting for '26. How do you think about continuing to find operating efficiencies inside the business to fund those investment growth investments as well. Thank you. Sundar Pichai: Thanks, Eric. You are right. And we've been supply constrained even as we've been ramping up our capacity. Obviously, CapEx spend this year is an eye towards the future. And you have to keep in mind some of the time horizons are increasing in the supply chain, etcetera. So we are constantly planning for the long term and working towards that. And obviously, how we close the gap this year is a function of what we have done in the prior years. And so there is that time delay to keep in mind. I expect the demand we are seeing across the board across our services, what we need to invest for future work for Google DeepMind, as well as for cloud, I think, is exceptionally strong. And so I do to go through the year in a supply constrained way. And maybe Anat can touch on the second part. Anat Ashkenazi: Sure. Thanks, Eric, for the question. Now I've mentioned on one of the previous earnings call our approach to how we look at efficiency and productivity. And we don't view this as an episodic one time project or but rather how we run the business on a regular basis and always seek additional opportunities to drive efficiency across the business And certainly, with the demand we're seeing, whether it's from external customers or across the organization, the more capital we can free up within the organization to invest the better we can turn this flywheel of making investments to drive future growth. And we're doing this across the organization. Whether it's within our technical infrastructure, certainly when we invest at these amounts, we look at how we can ensure that we are the most efficient with every dollars that goes towards our technical infrastructure, There are scientific innovations that are with our part of that process. Technical innovation, as you know and we've mentioned before, we primarily focus on construction of our own data centers. We do partner with some external parties on lease on occasion, but most of our data center, we can start ourselves, and we ensure that we do it in the most efficient way in a way that matches our workloads and our needs. We look at coding productivity that Sundar mentioned in the past, about 50% of our codes are written by agents, coding agents. Which are then reviewed by our own engineers. But certainly, it helps our engineers do more, move faster, with the current footprint. We look at how we run the business across the organization. So using AI within the business to drive daily operations. It can be all the way from the engineering team to small teams within our back office, even with my finance team, for example, we deployed agents within our treasury organization. We're deploying agents within how we run how we pay and reconcile invoice So there are opportunities across the business that we evaluate on a regular basis to ensure we can free up more of that capacity to invest in our future. Jim Friedland: Your next question comes from Doug Anmuth with JPMorgan. Your line is now open. Doug Anmuth: Thanks for taking questions. I have two. Over the last couple of years, we've seen considerable large language model leapfrogging in many that to continue. What are the ways that Google can build and maintain its Gemini position around data and distribution and product integration And then how should we think about the potential for TPUs to move outside of Google Cloud and into external data centers and develop as an incremental revenue stream. Thank you. Sundar Pichai: Doug, look, I think you know, the LLM frontier, you know, I mean, it's been an exciting trajectory, and I think 2026 will continue to show that progress. We're obviously improving these models across many paradigms, right? On pre-training, post-training, test time compute, so on. And we are bringing multimodal models into the picture. Are bringing agentic capabilities. The coding area is showing a lot of progress. And obviously, integrating all of this together and offering a great customer experience for our products as well as through our APIs to our Cloud customers, to me, feels like there's a lot of headroom ahead. And as you've seen, our trajectory over the past two years in terms of how we've been making progress, I think we are in a very, very relentless innovation cadence, and I think we are confident about maintaining that momentum as we go through 'twenty six. In terms of TPUs, I would think about it as it's reflected in our overall part of what makes Google Cloud an attractive choice is the wide choice of accelerators we bring to bear here, and we meet customers in terms of what their needs are and the choice as well as other things we bring as part of Google Cloud, the end to end efficiencies in our data centers, all of that comes to bear. And that's what you see in the momentum in Google Cloud. And given the overall investment we are making, we expect to be able to drive momentum there. So that's how I would think about it. Doug Anmuth: Thank you, Sundar. Jim Friedland: Your next question comes from Mark Mahaney with Evercore. Your line is now open. Mark Mahaney: Thanks. Two questions. One, could you just comment a little bit on the YouTube ad revenue, that 9% year over year growth? It sounded like Direct Response was good and it sounded from search that retail came in relatively strong. It's little surprising that didn't kinda come through in the YouTube ads revenue growth. And then, Sundar, can I ask you to try to get ahead of a debate in the market, which is kind of maybe at a deep seek moment again? You talked earlier about Jim and I being the AI engine for the most for some of the most successful software SaaS companies out there in the world, and it just seems there's a market belief that these software companies are kinda losing seat power losing pricing power, it looks like it'd be a really terrible customer base. I can't imagine that's actually gonna happen. But could you just talk about it? You're at the front forefront of AI and the impact that's happening on software companies. Why wouldn't that be, or why would it be undermining the economics of your large software SaaS company base? Thanks. Philip Schindler: So, Mark, so first of all, thank you for the question. For the full year 2025, our YouTube's annual revenue surpassed $60 billion across ads and subscription. In Q4, YouTube ads was driven indeed by strong growth in Dive Response. On the brand side, as Anat shared, the largest factor negatively impacting the year over year growth rate was lapping the strong spend on U. S. Elections. We also saw a slight impact in other brand related verticals. But taking a step back, I think it's important to think about YouTube ads and subs holistically. Because when a user shifts from being an ad supported user to a YouTube Music and Premium customer, it has a slightly negative impact on YouTube ads revenues, but a positive impact on our business. And we had strong revenue growth in YouTube subscriptions this quarter, particularly in the YouTube Music and premium category. Maybe the interesting part is what we're actually excited about, our roadmap and brand, the opportunity on connected TVs, more innovative ad formats, For example, the shoppable mastheads I spoke about earlier. That we piloted during Cyber five. We're working really, really hard to further connect brands and creators, scaling sponsorships, enabling advertisers to showcase their products, their services during high visibility spotlight moments. We continue to expand the functionality of the creator partnership hub, making it a lot easier for brands to actually find creators and develop campaigns. We're heavily focusing on brand deals, on measurement efforts. So there's a lot of interesting work in the pipeline. And on top of that, we're actually see opportunity also for upside with performance There's a lot of momentum with demand gen adoption. Across small and medium advertisers. We're also excited about the opportunity for continued ads innovation and direct response, like, for example, shoppable formats, including in the living room. Which is then helping drive strength in retail, the continued momentum in shorts, and so on. So overall, we're we're quite excited. Yeah. Sundar Pichai: Great. And, Mark, on in terms of Gemini adoption and how what this moment means for etcetera. Look, at least from my vantage point, you know, I definitely, see We have very, very good SaaS customers who are leaders in their respective categories. And what I see the successful companies doing is they are definitely incorporating Gemini deeply in critical workflows be it on improving their product experience and driving growth or using it drive efficiency within their organizations. And I think I think it is an enabling tool, just like it has been an enabling tool for us across our products and services, be it Search, YouTube, etcetera. I think the companies who are seizing the moment think, have the same opportunity ahead. And at least we are excited about the partnerships we have there and the momentum if I look at it in terms of their tokens usage, etcetera, the growth has been very robust. In Q4. Mark Mahaney: Thank you. Jim Friedland: Your next question comes from Mark Shmulik with AllianceBernstein. Your line is now open. Mark Shmulik: Yes. Thanks for taking the questions. Two, if I may. The first for Anat is, can you talk a little bit more the relationship between investment levels and how you kind of expect core performance to trend? Is there, like, an operating income or a free cash flow objective that you solve towards, or how do you think about greenlighting resources and projects? And then the second question for all of you, you know, a year ago, we probably could have guessed the answer to this question. Given where we are today, for each of you, what keeps you up at night here as you think about the Google story, and what's next? Thanks. Anat Ashkenazi: Thanks, Mark. Let me start with a question on the investment framework. And it's an important one and as you can imagine, an important one for us as well. We have a highly rigorous framework that we use internally, where we look at all the needs for investment, whether it's from own organization or from external customers, and have an estimate of what that investment could potentially yield, obviously not just near term but long term as well. So we take that into consideration when we make the following decisions. The first one is the total investment that we make across the company. This was, for example, in 2025, the $91 billion we invested in CapEx and our estimate for CapEx investment this year. So what's the total envelope that wanna invest to ensure that we can drive both near term and long term growth for the company? And then the second way we use that framework is to just allocate these funds across the organization, determine where we should make these investments. And throughout the year, as you can imagine, we always look to understand where things are moving, whether it's a external dynamics or internal dynamics. And I've mentioned some of the supply chain pressures we're seeing externally. So we look at this with a highly rigorous framework. To make sure that we're making the right decision. It was exciting to see the fact that we're already monetizing. And you saw it in the results that we've just issued this quarter, the investments that we've made in AI. It's already delivering results across the business. I know in cloud, it's very obvious external, but you've heard the comments on the success we're seeing in search, the comments from Sundar and from Philip, and then the frontier model development that really serves as the foundation for the organization. We then also look at just the cash flow, cash flow generation, the health of our financials and the balance sheet, that's important as well. So we take that into consideration when we make the decision about the overall level of investment. We wanna make sure we do it in a fiscally responsible way and that we invest appropriately, but we do it in a way that maintains a very healthy financial position for the organization. Sundar Pichai: And yeah, maybe I can answer on what keeps us up at night. Look. I think overall, we've been on this AI first trajectory for over a decade now, and it's it's it's what we've been methodically thinking our way through. It's the reason why we've been working on TPUs for over a decade, as an example. But I think specifically at this moment, maybe the top question is definitely around capacity, all constraints be it power, land, supply chain constraints, 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. So that's where I think we are meeting the moment well and it's definitely an area where I'm spending a lot of time on. Jim Friedland: Your next question comes from Michael Nathanson with MoffettNathanson. Your line is now open. Michael Nathanson: Thanks. I have one for Sundar and one for Anat. Sundar, you mentioned universal commerce protocol a bunch of times. I wonder if you could spend some time talking about the rationale for developing it. The opportunity that you see it solves for, what it means for the prop discovery funnel for consumers and for not any color you can provide on a CapEx guide between longer duration assets like buildings, and infrastructure and shorter cycle assets like technical equipment, that'd be helpful. Thanks. Sundar Pichai: Thanks, Michael. Obviously, people go through a lot of commercial journeys across many of our surfaces, search, YouTube, Gemini app, and so on. So I think there's as well as we support through cloud and ads, our entire retail partners as well. And the opportunity to improve the experience, I think, can be a huge foundational uplift here. But it's important to be approaching it, keeping in mind that our users, as well as merchants here and figuring out that value part of what's been good in designing the Universal Commerce protocol is it makes it much easier for users to complete transactions but at the same time, it allows merchants to help showcase range of their offerings, if they want to make promotions, etcetera. So all of that is built into the protocol. And I think you have to get that value prop for the ecosystem right to make the experience better. And so it's foundational. More importantly, we are now implementing the protocols and are Gemini models are making progress in those agentic capabilities. I think so I'm excited about a future where as people are going through discovery, searching, finding new things, if they're interested in acting upon it, all of that is seamless. And so it overall creates an expansionary moment. Anat Ashkenazi: And the question with regards to the CapEx and the kind of what makes up the total that we've announced for this year and last year. Approximately 60% of our investment in 2025 and it's going to be fairly similar in 2026, went towards machines, so the servers. Then 40% is what you referred to as long duration assets, which is our data centers and networking equipment. And I think you're probably referring to the depreciation delta between them, those long term duration assets depreciate over the building could be forty years or longer. Other components may be may less than that. Another important component is how we allocate the CapEx. And we've commented in the past about the allocation of our ML compute across the business. And for 2026, just over half of our ML compute is expected to go towards the cloud business. Michael Nathanson: Thank you so much. Jim Friedland: Your next question comes from Ross Sandler with Barclays. Your line is now open. Ross Sandler: Great. Just a question on the native Gemini $750,000,000 So we added 100,000,000 MAUs in the fourth quarter. Could you just talk high level about usage and retention of native Gemini? And is this $7.50 the right way to measure your progress against companies like Chachi BT or is there another cohort of users that aren't in that $7.50 that maybe we should also consider Thanks a lot. Sundar Pichai: Ross, I think, you know, we definitely saw I would say, extraordinary period of growth in Q4 for Gemini App. It's not just the growth in monthly active users, but there is definitely there was a sharp increase in engagement per user on the app. All the metrics be it active usage, the intensity of usage, retention, all showed distinct progress across iOS web, Android, etcetera, and geographically, globally. Definitely all the product experience improvements, the work we did with Nano Banana, the progress with the Gemini models all translated into strong momentum. And that momentum is continuing. So we are excited about that, and we'll continue to invest. Obviously, there are many people who are getting a deeply AI native experience in the context of AI mode in Search as well, And, you know, we are definitely seeing strong growth and progress. And the introduction of Gemini three in AI mode was a very positive driver as well. And obviously, we'll continue to evolve these experiences, and I'm excited about the opportunities there. Ross Sandler: Thank you. Jim Friedland: Your next question comes from Ken Gawrelski with Wells Fargo. Your line is now open. Ken Gawrelski: Thank you very much. Two, if I may, both on search. First, could you walk us through how you are evolving your views on the monetization of AI search activity, given the more conversational nature and longer periods of engagement per session, Consumer utility increasingly, is increasingly driven by the on platform results, not specifically the link outs and referrals. In that construct, how do you think about increasing the revenue opportunity to match the consumer utility? And is this increasingly where premium subscriptions play? And then question two, and it's related. As you think about partnerships such as the new Apple partnership on Siri. How do you think about the right way to align for success with those partners Previously, as disclosed in the DOJ documents, etcetera, It was a revenue share relationship, but now if you think about the utility that you're driving through AI search and through, you know, and through Gemini on those platforms, it may be less related to the actual search revenue. Could you just talk a little bit about how you align with partners for success there? Thank you. Philip Schindler: First of it may be worthwhile to say that the acceleration we saw in the search was not due to a single driver, but was really the result of many different parts of our business showing strength and working well together. And maybe I quickly add the vertical perspective, retail finance, health drove actually the greatest contribution to search More specifically to your question, the ongoing innovation is Revenue, though nearly every major vertical actually accelerated in Q4. as you know, core to what we do and the enhancements to the user and the advertiser experience really continue to drive our performance. And we make hundreds of these changes every quarter We see AR overviews and AR mode continue to drive greater search usage and growth in overall queries, including important and commercial queries. Gemini based improvements in search ads help us better match queries and craft creatives for advertisers. I talked about the understanding of intent and how this has significantly expanded our ability to deliver ads on longer and more complex searches. That were frankly previously difficult to monetize. AI Max, for example, is already used by hundreds of advertisers and continues to unlock billions of net new queries in that sense. We see strength with SMB advertisers expanding their budgets and the adopting automation tools leading to better ROI. On the creative side. We're using Gemini to generate millions of creative assets via text customization in AI Max and P Max. And so on. So we're we're very pleased with what we're seeing here. Jim Friedland: And our last question comes from Justin Post with Bank of America. Your line is now open. Justin Post: Great. Just want to follow-up on the Gemini app. Obviously, great growth there. Are you seeing any cannibalization of search as far as that activity as people start using that app more? And then second, on monetization, where are you on that? And with AgenTic and other ads coming, could that be incremental to your growth over the next few years? Thank you. Sundar Pichai: Right now, overall, look, I think we are giving people choice People are obviously using Search, experiencing AI overviews and AI more part of it, and Gemini app as well. And the combination of all of that, I think, creates an expansionary moment. I think it's expanding the type of queries people do with Google overall. And so overall, you know, some of it all is what we see as a growth opportunity. And we haven't seen any evidence of cannibalization there. And maybe Philip can comment on the monetization. Yeah. Think Philip Schindler: Sundar previously commented on AgenTig and how we think about it. And look, in general, as with all of our products, we really focus first and foremost on creating a great user experience. And we have excited about where we are with the ads and AI overviews and early experiments in AI mode, including innovations like direct offer and our road map for the future. In terms of the Gemini app, today, we are focused on a free tier and subscriptions and seeing great growth, as Sundar discussed. But ads have always been part of scaling products to reach billions of people, and if done well, ads can be really valuable and helpful commercial information and the right moment, we'll share any plans. But as we've said, we're not rushing anything here. Jim Friedland: Thank you. Operator: And that concludes our question and answer session for today. I'd like to turn the conference back over to Jim Friedland for any further remarks. Jim Friedland: Thanks everyone for joining us today. Look forward to speaking with you again on our first quarter 2026 call. Thank you, and have a good evening. Operator: Thank you, everyone, This concludes today's conference call. Thank you for participating. You may now disconnect.

Big Tech plans to spend about $650 billion on AI computing in 2026

The spending planned by Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp., all in pursuit of dominance in the still-nascent market for AI tools, is a boom without a parallel this century. Each of the companies' estimated outlay for this year would set a high-water mark for capital spending by any single corporation in any one of the past 10 years, according to Bloomberg data. Four of the biggest US technology companies together have forecast capital expenditures that will reach about $650 billion in 2026 -- a mind-boggling tide of cash earmarked for new data centers and the long list of equipment needed to make them tick, including artificial intelligence chips, networking cables and backup generators. The spending planned by Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp., all in pursuit of dominance in the still-nascent market for AI tools, is a boom without a parallel this century. Each of the companies' estimated outlay for this year would set a high-water mark for capital spending by any single corporation in any one of the past 10 years, according to Bloomberg data. The search for a comparison to the high-flying spending projections -- which came as the four reported earnings in the past two weeks -- requires going back at least as far as the telecommunications bubble of the 1990s, and perhaps to the build-out of the US railroad networks in the 19th century or postwar federal investments in interstate highways or even New Deal-era relief programs. The ever-larger numbers -- in total, an estimated 60% increase from a year ago -- means yet another acceleration in the wave of data center construction taking place around the world. The sprint to build these sprawling facilities, which hold racks of humming servers powered by expensive processors, has pinched energy supplies, raised worries of inflated prices for other users, and brought developers into conflict with communities worried about competition for power or water. It also raises the risk that construction spending by a narrow set of affluent companies, already accounting for a rising share of economic activity in the US, will distort big-picture economic data. The four companies "see the race to provide AI compute as the next winner-take-all or winner-takes-most market," said Gil Luria, an analyst at DA Davidson. "And none of them is willing to lose." Last week, Meta said full-year capex will rise to as much as $135 billion -- a potential jump of about 87%. Microsoft the same day reported a 66% increase in second-quarter capital spending, topping estimates, and analysts project it will shell out almost $105 billion in capex for the fiscal year ending in June. The news triggered the second-biggest single-day decline in market value for any stock. Alphabet, founded in a garage south of San Francisco in 1998, on Wednesday rattled investors when it revealed a capital spending forecast that exceeded not just analyst estimates, but the spending of a vast swath of US industry -- it plans to spend as much as $185 billion. And Amazon on Thursday bested that with a planned $200 billion in capital expenditures for 2026, also sending its shares tumbling in extended trading. By contrast, the largest US-based automakers, construction equipment manufacturers, railroads, defense contractors, wireless carriers, parcel delivery outfits, along with Exxon Mobil Corp, Intel Corp., Walmart Inc. and the spun-off progeny of General Electric -- 21 companies -- are projected to spend a combined $180 billion in 2026, according to estimates compiled by Bloomberg. Each tech giant has laid out a slightly different route to recouping their investments, but their spending is based on the same premise: that OpenAI's ChatGPT and rival tools capable of generating text and displaying elements of human reasoning will play an increasingly important role for people at work and at home. Building the cutting-edge software models that makes this shift possible is an extraordinarily expensive process that requires stringing together thousands of chips that sell for tens of thousands of dollars apiece. Hence the big bills. The spending is also predicated on the notion that the end products will result in exponentially higher future revenue. The outlays are transforming companies that just a few years ago had a relatively small physical footprint, even as their digital services found their way to billions of people. For much of their existence, Meta and Google parent Alphabet counted their plush corporate campuses and office space as a significant portion of their real-world assets. Most of their spending went toward salaries and stock grants for the engineers and salespeople who worked there. No longer. Last year, Meta spent more on capital projects than research and development -- mostly engineers' salaries -- for the first time in six years. The Facebook and Instagram parent at the end of last year owned $176 billion in property and equipment, about five times the tally at the end of 2019. As the numbers push higher, what is still unclear is whether the companies will all be able to execute on their lofty ambitions. Since the data center build-out has escalated, they're already competing for finite crews of electricians, cement trucks and Nvidia Corp. chips rolling out of Taiwan Semiconductor Manufacturing Co. factories. "There are and will be bottlenecks," Luria said. There's also the question of how they will afford it. Meta and Google, whose profit mainly comes from digital advertising; Amazon, the largest online retailer and cloud-computing provider; and Microsoft, the biggest seller of business software, are each dominant in their industries and have ample cash cushions. Their willingness to plow huge chunks of that cash into an AI-fueled future means those reserves, and investors' patience, will be tested. "You've had these cash-generating machines," said Tomasz Tunguz, an investor at Theory Ventures, who earlier in his career worked at Google. "Now, all of a sudden they need that cash, and they need more of it, so they're borrowing." Tunguz, who published a blog last year comparing the AI boom to past investment frenzies, says they don't always end well. But on the way up, he said, "they are all huge catalysts for the economy." What is more certain is that investors who had rushed to buy the tech titans' stocks over the past year have shown greater hesitance in the face of the skyrocketing capital spending across the board, in some cases selling even when their main businesses -- from online advertising and web search to ecommerce and productivity software -- have held steady and revenue has exceeded estimates. "What's spooking people? Definitely the analyst narrative and the rhetoric" about the pace at which AI will disrupt businesses, said Steve Lucas, chief executive officer of Boomi, a firm that helps companies stitch together their data and software. "I would not debate the potential of AI," he said. "I would absolutely debate the time frame, and I would passionately debate the economics."

Alphabet Bets $185B on Gemini, Agentic Commerce and Enterprise AI | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. Management framed the commitment during the call with analysts as a direct response to sustained demand for artificial intelligence (AI) compute across consumer products, enterprise platforms and cloud infrastructure. Chief Executive Sundar Pichai told analysts that Alphabet is already operating under capacity pressure. "We've been supply constrained even as we've been ramping up our capacity," he said, adding that the company expects to remain constrained through much of 2026 as training, inference and enterprise workloads continue to compound. The usage metrics are rising quickly. Gemini now processes more than 10 billion tokens per minute via direct APIs, up from 7 billion last quarter. The Gemini app has surpassed 750 million monthly active users. Gemini Enterprise has already sold more than 8 million paid seats in roughly four months. Across consumer services, Alphabet reported more than 325 million paid subscriptions, while Google Cloud backlog climbed to $240 billion, up 55% sequentially. Consolidated revenues touched $113.8 billion in the quarter, up 18% year on year. Shares were down about 1.5% in after-hours trading. Pichai emphasized that Gemini's momentum is marked by strong enterprise demand. More than 120,000 organizations now use Gemini, and Alphabet said 95% of the top 20 software-as-a-service (SaaS) companies and over 80% of the top 100 have integrated Gemini into their products or workflows. And in response to analyst queries about the pressures facing SaaS firms, rather than portraying AI as destabilizing software economics, Pichai described Gemini as an enabling layer. "I definitely see we have very, very good SaaS customers who are leaders in their respective categories," he said. "What I see the successful companies doing is they are definitely incorporating Gemini deeply in critical workflows, be it on improving their product experience and driving growth, or using it to drive efficiency within their organizations." A key theme during the quarter and during the call was Alphabet's push toward agentic commerce, where AI systems progress from recommendation engines to transaction facilitators. Pichai said 2025 focused on groundwork, including developing the universal commerce protocol with partners. The next phase integrates those capabilities directly into Gemini, AI Mode and Search. Consumers will be able to move from discovery to purchase inside conversational experiences, with new checkout flows already being introduced for select merchants. "This is the year where you will see consumers actually being able to use all of this," Pichai said, referring to the rollout of agentic shopping across Alphabet's surfaces. On the advertising side, Google Services leadership outlined early monetization efforts, including Direct Offers placed beneath AI responses and agentic tools that help advertisers generate campaigns and creative assets in real time. Advertisers used Gemini to create nearly 70 million creative assets in Q4 alone. Even with AI commanding attention, Alphabet's traditional engines remain central to performance. Search revenue grew 17% year over year, driven by strength across retail, finance and health. AI Overviews and AI Mode are extending session length and complexity, with AI Mode queries now averaging three times longer than conventional searches and often leading to follow-up questions. Management said Gemini-based improvements are materially increasing ad relevance while reducing irrelevant impressions. Small and mid-sized businesses are expanding budgets as automation improves return on investment, and advertisers increasingly rely on AI to assemble creatives at scale. Google Services revenue reached $96 billion for the quarter. Google Cloud revenue rose 48% to $17.7 billion, supported by enterprise AI infrastructure and solutions. Video continues to operate as both growth engine and commerce surface. YouTube surpassed $60 billion in annual revenue across advertising and subscriptions. Direct-response ads drove Q4 growth, while subscription revenue advanced, particularly in YouTube Music and Premium, even as election-related comparisons weighed on brand advertising. Executives highlighted momentum in Shorts, connected-TV formats and shoppable ad experiences, including interactive mastheads that allow viewers to browse products and send purchase links to their phones. Alphabet also confirmed deepening collaboration with Apple, serving as its preferred cloud provider while jointly developing next-generation foundation models based on Gemini technology. The partnership extends Alphabet's AI footprint beyond its own devices and services. Looking forward, executives repeatedly returned to supply constraints as the defining operational challenge. Power availability, data center construction timelines and component lead times will shape how quickly Alphabet can convert demand into deployed capacity. Chief Financial Officer Anat Ashkenazi said roughly 60% of capital spending continued to go toward servers, with the remaining 40% directed to data centers and networking. She stressed that efficiency efforts are ongoing, from model optimization that reduced Gemini serving costs by 78% in 2025 to broader productivity initiatives across engineering and finance. Pichai framed the moment as both opportunity and obligation. Compute capacity, he said, is what "keeps us up at night." Alphabet's response is to invest and integrate and treat AI as infrastructure.

Google Soars High as AI Investments Bear Fruit in Search and Cloud Business

The results are coming at a time when investors are questioning tech companies on the payoffs from massive AI spends over the past several quarters Google's parent Alphabet announced quarterly earnings on a day when global stock markets turned jittery over the potential impact on software development of the AI plug-ins revealed by Anthropic. Their stock, which soared over 20% since its last earnings, appears to be sitting pretty with search revenue spiking 17% on top of a 14 percentage point lift in cloud income. Nay-sayers from exactly a year ago when Alphabet stocks took a nosedive over reports of a steep spending plan in AI and a slowdown in Google Cloud revenues, may be ready to overturn their concerns now. To the extent that they might be willing to support Sundar Pichai's vision now, especially since Alphabet has now delivered red-hot Q4 numbers. While search revenues stood at 17%, up from 15% in the third quarter and revenue from the cloud business growing at a robust 48%, the real winner is the way in which Google has adopted AI into its own world. In other words, they are now enjoying the fruits of investing big in AI, even if these were then considered a late reaction to the growing clout of OpenAI and Microsoft. The narrative around AI killing search traffic and growth that emanated when ChatGPT was spreading its wings, Google seems to have put these concerns to rest. The growth in search income over the past couple of quarters suggests that Google has improved the effectiveness of their ads with sharper targeting via more complex search queries. In fact, Alphabet's chief business officer Phillip Schindler took pains to explain this phenomenon to the analysts on an earnings call. "Gemini's understanding of intent has increased our ability to deliver ads on longer, more complex searches that were previously challenging to monetize," Schindler said. CEO Sundar Pichai too added his two cents to the story by revealing that investments in AI and infrastructure were now driving revenue and growth across the board. The company also noted that Capex could as much as double this year as they deepen these investments to remove any constraints on compute capacity. Industry watchers have predicted that Big Tech rivals could collectively shell out more than $500 billion on AI and its associated activities during 2026. While Meta has already announced that they have hiked capital investment for AI development by 73%, Microsoft also reported record numbers in this regard in the last quarter. The irony of this development is that additional investments by these companies are coming at a time when investors have been questioning the resultant payoffs. This is where Google has bucked the news cycle in some ways. Alphabet stock has surged 75% since January 2025, barring very brief spells of sell-offs triggered mostly by geopolitics. If anything Google's resurgence could be just the story of how AI can help a business if those in charge consider it a tool and not as some sort of magic wand. From a moment in history where everyone agreed that AI chatbots could kill search, today it is proven that Google has used AI effectively to place ads around the most complex of search queries. Similarly, their Q4 cloud revenues show a run-rate of $71 billion, up from just about $20 million in 2021, Google again being a late entrant into the field after Amazon (AWS) and Microsoft (Azure). Juxtapose this figure with the $132 billion run rate achieved by market leader AWS in their Q3 and the story crystallises itself better. (Just so that you know, Amazon will be delivering fourth quarter results later tonight). The question though is would concerns continue around the AI bubble and will this impact Alphabet in the upcoming quarters? Of course, the nay-sayers may still point out that Google continues to operate at margins below those of their larger rivals. Alphabet reported operating margins of 30% this quarter over 23.7% achieved in Q3, but market analysts believe that they must do better on this front in order to remain in the cloud infrastructure race. That the Alphabet stock lost about a percentage point in after-hours trading last night may be more of a reaction to the larger sell-off over fears of AI rendering IT services redundant. In fact, some analysts believe that people are getting tired of the AI refrain though they also note that Alphabet's decision to double capex to between $175 billion to $185 billion in 2026 for enhancing compute capacity might have contributed to the falling sentiment. However, we cannot also ignore the fact that the capex projection seen in the context of their revenue generation of $164 billion in 2025 does present a cause for concern. Alphabet, which already has a sizeable debt, may have to borrow more over time. The company also treats the costs on its DeepMind AI research in a special expense line that doubled to $5.9 billion in Q4. In conclusion, while the overall picture looks bright with search revenues back to decent growth and cloud incomes also hitting a peak, there are reasons why the market remains jittery. We would say this is more to do with the unbridled spending on expanding AI training and inference capacity than anything specific to Google's line of business. However, that's a bubble that we will take up some other time. For now, all we would say is "Bravo Sundar Pichai. May your instinct continue to deliver such great outcomes."

Google pulls ahead of OpenAI with stellar AI growth, shares fall 3%

Alphabet is taking on OpenAI with a gusto that underscores Wall Street's perception that ⁠the Google parent is the leader in AI, a turn of events from a year ago when investors thought it was badly lagging behind rivals and punished its stock. That showed in the confident tone executives struck on the post-earnings call, the first since Alphabet released the Gemini 3 model. But its shares fell 3% on Wednesday after the company said it would spend up to $185 billion this year, deepening investor scrutiny as the expenditure potentially more than doubles from 2025 and eclipses rivals Microsoft, Meta and Amazon. "We're quickly getting to north of a trillion dollars in combined 2026 investment across the mega caps if we consider both capital expenditure and associated resourcing needs," Bernstein analyst Mark Shmulik said. "For that trillion to pay off suggests the total addressable market for AI-driven products and enhancements needs to be multiples of that very quickly." For now, the AI spending is reaping returns, and its shares remain more than 80% higher in the past 12 months even with Thursday's decline. Alphabet's prepared remarks about AI in 2025 had focused on product usage and AI revenue generated specifically via its cloud-computing unit. Cloud unit revenue surged 48% in the December quarter. That came as Wall Street's has sent a stark message to tech companies: Soaring AI spending can continue only if tech companies demonstrate commensurate financial returns. "Overall, we're seeing our AI investments and infrastructure drive revenue and growth across the board," CEO Sundar Pichai said. Google's conviction about AI-fueled revenue is backed by growth in both its consumer and enterprise businesses. Pichai said the Google Gemini app, which competes with OpenAI's ChatGPT, exceeded 750 million monthly active users at the end of the December quarter, compared with 650 million in the prior quarter. That still trails ChatGPT, which OpenAI CEO Sam Altman said in October had eclipsed 800 million weekly active users. "We are also seeing significantly higher engagement per user, especially since the launch of Gemini 3," Pichai said. Gemini 3 has also been integrated into "AI Mode" in Google's search engine and powers Google's enterprise version of Gemini, which Pichai said had reached 8 million paying licenses. TURNING TIDE Since the start of last year, Alphabet has gone from laggard to leader among the "Magnificent Seven" megacap companies and is now matched by only Nvidia and Apple among companies with market capitalizations of more than $4 trillion. Despite taking a comparably modest tone on capital spending for the year, Microsoft's shares took a massive beating last week, due in part to heightened concerns about its reliance on OpenAI. The company said its fiscal third-quarter spending would decrease from the record $37.5 billion it shelled out in the October-to-December period. With OpenAI striking a string of multi-billion-dollar deals despite still losing money, investors have grown concerned about the company's ability to finance those commitments, souring sentiment around major tech firms with which it has close links. Paul Meeks, head of tech research at Freedom Capital Markets, said Alphabet was benefiting from a contrast in sentiment, despite a capex forecast that was "eye-watering." "I do think there's a narrative emerging here where the market is ⁠favoring Google versus OpenAI," Meeks said. "This time last year, ⁠every announcement by OpenAI to do business with somebody was applauded. But then in late 2025, now people are saying, 'Oh my god, too much of my revenue backlog or AI infra spending is coming from OpenAI.'" Shares of Oracle, whose contract backlog of more than $500 billion hinges largely on OpenAI, are down about 49% since the start of October. Microsoft, which holds a 27% stake in OpenAI and counts it as a massive customer, has slid more than 20% over the same period. Meanwhile, Alphabet has jumped about 36%. "The deals that OpenAI has with Microsoft and Oracle are highly tied to their ability to raise future funds," said Dan Morgan, portfolio manager at Synovus Trust. "I think that is why you are seeing the street favor Alphabet." Alphabet's deep war chest has been filled by major deals that it has struck in recent months to power products and infrastructure at tech firms Meta and Apple. "If you are software and you are connected to OpenAI, you're doubly not intriguing to people. Right now, Google has the hot hand," said Eric Clark, portfolio manager of the LOGO ETF. (You can now subscribe to our ETMarkets WhatsApp channel)

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

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 per cent from the previous year, while also posting more than 30 per cent 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 per cent from the prior year to US$34.5 billion, or US$2.82 per share, while revenue climbed 18 per cent to US$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 per cent in the past five months, giving it a US$4 trillion market value. That may have raised the bar for Alphabet to impress investors as the company's shares dipped 1 per cent in extended trading following the report. Apple, also currently worth US$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 US$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 US$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 US$82.3 billion in the fourth quarter, up 14 per cent from the previous year. Google Cloud, which oversees the data centers behind many AI services, posted revenue of US$17.7 billion, a 48 per cent increase. Search saw more usage than ever before, with AI continuing to drive an expansionary moment

Tech's AI Dreams Spook Investors - Are They Right to Be Fearful? | Investing.com UK

The sell-off in big tech shares after companies unveiled plans to spend around $660bn on artificial intelligence has rattled markets. Investors have recoiled at the sheer scale of the numbers. Fears of an AI bubble have returned with force. I understand the unease. When Amazon (NASDAQ:AMZN), Google, Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META) collectively signal a 60% jump in capital expenditure compared with last year, it grabs attention. When Amazon alone flags spending of up to $200bn in a single year, far beyond expectations, it inevitably triggers questions about discipline, returns and excess. But fear is a poor guide to assessing long-term investment logic. Much of the current anxiety rests on a flawed framing of what this spending represents and how value from AI will actually emerge. The first mistake is to treat this investment as though it were tied to a single product or service that must quickly prove itself in isolation. That assumption misses the point. What is being built is foundational infrastructure. Data centres, specialised chips and AI platforms form the base layer of modern digital businesses. They sit beneath everything else. This kind of infrastructure does not announce its value through a neat, standalone revenue line. It shows up gradually, across an entire ecosystem. Better performance. Lower costs. Stickier customers. Stronger pricing power. At the scale these firms operate, even small efficiency gains compound into substantial and durable earnings support. Another issue is timing. Markets tend to react to cash outlays rather than economic life. Much of this spending is front-loaded. The assets, however, are long-lived. Accounting spreads its costs over many years, even though the investment decision is immediate. Short-term pressure on cash flow tells us very little about long-term profitability. There is also an assumption that AI must justify itself directly. That is a narrow view. AI does not need to become a standalone profit centre to be valuable. Its impact is felt through improved customer retention, reduced churn and enhanced functionality across existing platforms. Those effects are harder to model, but they are powerful. The cloud businesses make this clearer. As AI workloads mature, they anchor customers more deeply into ecosystems. Contracts become larger. Switching costs rise. Over time, this dynamic supports stronger margins rather than weaker ones. These cloud platforms already generate exceptional profitability. Advanced AI extends that advantage rather than undermining it. Some of the spending is also defensive. Scale matters. In AI, relevance depends on compute capacity, data and integration. Falling behind carries strategic risk. Markets may dislike competitive escalation, but for the companies involved, standing still carries greater danger. History offers a useful perspective. Previous waves of infrastructure investment were also greeted with scepticism. Fibre networks, cloud computing and mobile data all faced periods of doubt when capital spending surged ahead of visible returns. In each case, the spending later proved foundational. The companies that committed early shaped entire markets. Volatility around AI investment reflects uncertainty about timing, not a collapse in underlying logic. Investors are struggling to price when returns arrive, not whether they arrive at all. That distinction matters. The bigger risk may lie in underinvestment rather than excess. Failing to build sufficient capacity now could constrain growth later, ceding advantage to competitors willing to commit capital with a longer horizon. AI investment at this scale is uncomfortable to watch. Big numbers always are. Yet discomfort does not equal irrationality. What is unfolding looks less like a reckless gamble and more like a deliberate effort to secure future earnings power. Fear may dominate today's headlines. Time will judge whether patience proves the better strategy.

Big Tech's $600 billion spending plans exacerbate investors' AI headache

NEW YORK/LONDON, Feb 6 (Reuters) - A planned $600 billion artificial intelligence spending splurge by big tech firms in 2026 is adding to investor unease as they assess the implications for profitability as well as a potential existential threat to software firms. Shares of Amazon, which had announced a $200 billion capital expenditure outlay, slid 7% on Friday while Alphabet lost 3% after the company said on Wednesday that capital spending could double this year. Meta Platforms was down 1.3%. Other heavyweight technology companies, however, were trading higher: Nvidia rose 7%, Microsoft rose 1%, Tesla was up 4%. The benchmark S&P 500 added 1.6% while the Nasdaq rose 2% although both indexes are set to finish the week lower. "The market's viewpoint is that the AI build-out trade, and the way they've pulled forward all these earnings for many, many years, we think that's just got too pricey," said Andrew Wells, chief investment officer at SanJac Alpha in Houston. "It's not that the trade is over, but it got too pricey in pulling forward all these potential future revenues and not really pricing in the risk into all that. So it's a de-risking trade." Meanwhile, the equities of data analytics firms continued to come under selling pressure on concerns that they face an existential threat from powerful new AI models. Canada-based Thomson Reuters, which suffered a record one-day plunge earlier this week, was down 0.7%. London-listed RELX's shares lost 4.6% and notched a 17% tumble in their worst week since 2020. The S&P 500 software and services index has fallen almost 8% this week and has seen around $1 trillion in market value evaporate since January 28. "Headlines that would have pushed shares to fresh highs during the peak of AI optimism are now being interpreted far more cautiously by investors," said Carlota Estragues Lopez, equity strategist at St. James's Place in London. "It's not just return-on-investment that worries investors, but also the risk of narrow market leadership that struggles to broaden beyond a handful of mega-cap names." JOLT TO DATA ANALYTICS FIRMS A selloff in software and data and analytics firms was triggered by a new plug-in from Anthropic's Claude. Shares in London Stock Exchange Group clawed back some ground on Friday, but their price was still down almost 8% for the week in a second straight week of sharp losses. This week's drawdown in AI-exposed shares has weighed on broader equity markets. Global shares are on track to ease 0.33% for the week. The rout has been particularly acute in India, where shares of software exporters plunged another 2% on Friday as they ended a week that has seen $22.5 billion in market value losses. Investor nerves over potential AI-driven disruption are coinciding with a growing tendency to punish big tech firms for signaling even heavier spending on the technology. Google parent Alphabet also upped its spending plans on Thursday, sending its shares as much as 8% lower at one point, although they ended the day flat. "Both Alphabet and Amazon delivered strong underlying business performance, driven by better-than-expected growth in cloud. But that hasn't been enough to distract markets from their ballooning capital investment plans," said Aarin Chiekrie, equity analyst, Hargreaves Lansdown. (Reporting by Chibuike Oguh in New York, Lucy Raitano and Dhara Ranasinghe in London; Editing by Amanda Cooper, Alexander Smith and Nick Zieminski) By Lucy Raitano, Dhara Ranasinghe and Chibuike Oguh