Prime Highlights:
- Alphabet plans a sharp increase in capital spending for 2026, signaling strong confidence in long-term growth and rising demand for its cloud and technology services.
- The company delivered better-than-expected quarterly results, supported by solid performance across revenue, earnings, and cloud operations.
Key Facts:
- Alphabet expects capital expenditure in 2026 to range between $175 billion and $185 billion, more than double its spending in 2025.
- Google Cloud reported a 55 percent sequential increase in backlog, reaching $240 billion by the end of the fourth quarter, while cloud revenue rose nearly 48 percent year over year.
Background:
Alphabet has raised the bar for artificial intelligence infrastructure investment, announcing plans to more than double its capital expenditure in 2026 as it accelerates efforts to meet soaring demand for AI and cloud services.
The Google parent company said it expects capital spending next year to range between $175 billion and $185 billion, a sharp increase compared to its 2025 outlay. The investment will primarily support expanded AI compute capacity for Google DeepMind, growing cloud customer demand, and strategic initiatives across the company’s broader portfolio.
The announcement came alongside Alphabet’s fourth-quarter earnings report, in which the company exceeded Wall Street expectations on revenue, earnings per share, and cloud performance. However, despite the strong results, Alphabet’s shares slipped in extended trading as investors remained cautious about the company’s rising spending.
Alphabet’s projected spending places it ahead of its hyperscaler peers. Meta has forecast capital expenditure of up to $135 billion in 2026, while Microsoft has indicated a sequential decline in spending in the near term. Analysts estimate Amazon’s capital spending will rise to about $146.6 billion this year. Alphabet’s guidance signals a more aggressive push as competition intensifies across the AI sector.
Company executives emphasized that the spending increase is driven by real demand rather than speculation. Google Cloud reported a 55 percent sequential jump in backlog, which more than doubled year over year to $240 billion by the end of the fourth quarter.
Chief Financial Officer Anat Ashkenazi said most of the company’s 2025 capital expenditure went into technical infrastructure, with investments split between servers, data centers, and networking equipment. Similar priorities are expected to continue in 2026.
Alphabet also highlighted product momentum during the quarter. Its Gemini AI app now has 750 million monthly active users, while Chief Executive Officer Sundar Pichai reaffirmed Google’s role as Apple’s preferred cloud partner for enhancing Siri with advanced AI capabilities.
