Alphabet to nearly double 2026 capital spending as AI race intensifies

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TL;DR

Alphabet, Google’s parent company, plans to sharply increase capital expenditure in 2026 to between $175 billion and $185 billion, nearly double last year’s $91 billion, as it accelerates infrastructure investments for artificial intelligence, cloud and search — underscoring the intensifying competition in the AI era.  

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Alphabet Inc., the parent company of Google, is preparing a historic surge in capital spending as part of its strategy to stay ahead in the global artificial intelligence arms race. The company told investors that its projected capital expenditures for 2026 could reach $175 billion to $185 billion, roughly double the amount it spent in 2025 — a move reflecting its prioritization of AI compute, data centers and related infrastructure.

“We are seeing our AI investments and infrastructure drive revenue and growth across the board.” — Google CEO Sundar Pichai on Alphabet’s capex strategy.  

The announcement came alongside robust fourth-quarter earnings, with Alphabet reporting an 18% rise in revenue to $113.8 billion and net income climbing 30% compared with the same period the prior year. The growth was driven by strength in digital advertising, search, and particularly Google Cloud, which showed a 48% year-over-year revenue increase — its fastest growth in years. 

Executives emphasised that the elevated capital spending is aimed at addressing capacity constraints and fueling long-term growth, as AI workloads demand significant computing power and datacenter expansion. Industry analysts note that Alphabet’s aggressive investment places it among the leading tech firms pouring resources into AI infrastructure, alongside rivals like Meta and Microsoft.  

While investors reacted with some caution about the ballooning outlays, Alphabet’s financial performance provides a strong backdrop for the spending plan. The company’s flagship AI models and services, including its Gemini AI lineup, are increasingly central to product strategies across search, cloud and third-party partnerships. 

The massive capex plan signifies a pivotal moment in the tech giant’s efforts to bolster AI growth and maintain leadership as competitors accelerate their own investments in next-generation technologies.