Feb 4 (Reuters) – Alphabet, owner of Google, said on Wednesday that the company’s capital spending could double this year, in yet another aggressive increase in spending by Google’s parent company, as it deepens investments to ease constraints on computing capacity and advance the race for artificial intelligence.
Alphabet and its Big Tech rivals are expected to collectively spend more than $500 billion on AI this year. Meta last week increased capital expenditures for AI development this year by 73%, while Microsoft also reported record quarterly capital expenditures.
The aggressive expansion in spending comes at a time when investors are increasingly concerned about the return on AI investments. Google, however, has managed to show strong progress in its AI efforts, and its shares are up 76% since the start of 2025.
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“We are seeing our AI investments and infrastructure drive revenue and growth across all areas,” Chief Executive Sundar Pichai told analysts on a conference call Wednesday.
Alphabet executives said investments in AI computing capacity — servers, data centers and networking equipment — are key to the company’s plans to achieve capital spending of between $175 billion and $185 billion this year, up from $91.45 billion in 2025. Analysts, on average, expected the company to spend about $115.26 billion this year, according to data compiled by LSEG.
Alphabet’s shares were volatile in after-hours trading, falling 6% before recouping most of the losses and closing down just 1% as investors weighed increased spending against revenue and profit growth, both above expectations in the December quarter.
The company’s cloud business, in particular, saw exceptional growth in the fourth quarter ending in December, increasing 48% to $17.7 billion, exceeding analysts’ expectations. This represented the fastest pace of growth in more than four years.
‘We have been facing supply constraints, even though we have increased our capacity,’ said Pichai. “Obviously, our capital spending this year is a look to the future.”
Pichai said he expects Alphabet to face continued capacity constraints throughout the year.
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The company reported total revenue of $113.83 billion for the quarter, beating analysts’ estimates of $111.43 billion, according to LSEG data. Adjusted earnings per share of $2.82 also beat estimates of $2.63.
