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

Alphabet, the parent company of Google, has announced plans to spend between $175 billion and $185 billion on capital expenditures this year, significantly exceeding analyst expectations of $115.26 billion. This aggressive investment is part of the company's efforts to push ahead in the AI race. The announcement led to a more than 6% drop in the company's shares in extended trading. Google Cloud revenue grew 48% to $17.7 billion in the fourth quarter, surpassing analyst estimates of a 35.2% jump. The company is investing heavily in AI infrastructure to meet growing demand and fuel its own AI development. Google Cloud, along with its rivals Amazon Web Services and Microsoft's Azure, has been dealing with capacity constraints that have limited its ability to capitalize on AI demand. The three cloud companies, along with Meta, are expected to collectively spend over $500 billion on AI this year. Google has made significant progress in its AI efforts, including the successful launch of its Gemini 3 model, which has propelled the company forward in the AI arms race. The company's AI assistant app has exceeded 650 million users per month, and its AI Overviews feature in search has reached over 2 billion monthly users. Google has also partnered with Apple to power its revamped Siri voice assistant with its Gemini models, unlocking a huge market with Apple's installed base of over 2.5 billion devices.