Alphabet reported fourth-quarter revenue that beat expectations and said it plans to spend much more than investors expected in 2026.
Google’s parent company said it will spend between $175 billion and $185 billion this year, compared with the $119.5 billion that analysts had expected. The company’s fourth-quarter sales, excluding payments to partners, were US$97.23 billion, exceeding the US$95.2 billion expected, on average, by analysts, according to data compiled by Bloomberg.
Google has been racing to reinvent its business for the AI era, working to keep consumers in the habit of visiting its search page even as they can also turn to chatbots from competitors like OpenAI’s ChatGPT. The company quickly improved its Gemini model and integrated it into its products — an effort that required massive investments in data centers and chips to improve the model and serve cloud computing customers.
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This effort is paying off. Google is supplying up to one million of its specialized AI chips to Anthropic, cementing Google’s position as a leading infrastructure provider in the AI sector. Gemini will also be an AI provider for Siri on Apple Inc.’s iPhones.
But to justify this high spending, Alphabet needs to demonstrate progress in its cloud computing and search advertising businesses. The company has said its massive investments in AI — funding new infrastructure, research and talent — are essential to compete with rivals such as Amazon Inc., Microsoft Corp. and Microsoft Corp. and OpenAI.
