Alphabet said on Wednesday that its capital expenditure could rise sharply this year, potentially reaching nearly double the level of the previous year, as the Google parent steps up investments to expand computing capacity and strengthen its position in the global artificial intelligence race.
The company’s plans come as major technology firms prepare for unprecedented levels of AI-related spending. Alphabet and its Big Tech peers are expected to collectively invest more than $500 billion in artificial intelligence this year. Meta recently increased its capital investment for AI development by 73%, while Microsoft reported record quarterly capital expenditure, underscoring the intensity of competition in the sector.
Alphabet executives said the increase in spending is aimed primarily at easing constraints on computing infrastructure, including servers, data centers, and networking equipment. The company is targeting capital expenditure in the range of $175 billion to $185 billion this year, a significant jump from $91.45 billion in 2025. By comparison, analysts surveyed by LSEG had expected Alphabet to spend an average of $115.26 billion.
The aggressive expansion comes at a time when investors have become increasingly cautious about the returns generated by large-scale AI investments. Despite those concerns, Alphabet has pointed to measurable progress in its AI initiatives, particularly within its cloud business, which has benefited from rising enterprise demand. The company’s stock has climbed 76% since the start of 2025.
“We are seeing our AI investments and infrastructure drive revenue and growth across the board,” CEO Sundar Pichai told analysts during a conference call on Wednesday.
Alphabet said the planned spending increase reflects the central role of AI computing power in its long-term strategy. Executives emphasized that continued investment in infrastructure is necessary to support expanding AI services, maintain performance levels, and meet growing customer demand across products.
The scale of the proposed outlay initially unsettled investors. Alphabet shares were volatile in after-hours trading, dropping as much as 6% before recovering some ground to trade about 2% lower. The market reaction reflected a balancing act between concerns over rising costs and confidence driven by strong revenue and profit, both of which exceeded expectations in the December quarter.
Alphabet’s spending plans highlight the broader shift underway across the technology sector, where companies are committing vast sums to AI development in anticipation of long-term gains, even as near-term profitability and returns remain under close scrutiny.
