Google’s parent company, Alphabet, beat Wall Street expectations on Wednesday, and is planning a sharp increase in capital spending in 2026 as it continues to invest deeply in AI infrastructure.
Alphabet on Wednesday reported profit of $34.5bn in the recently ended quarter, as revenue from cloud computing soared 48%.
The company also forecast spending between $175bn and $185bn this year, a figure much higher than analysts’ expectations of roughly $115bn.
In an earnings call, investors pressed Alphabet’s chief executive, Sundar Pichai, on the significant increase. “We’ve been supply constrained, even as we’ve been ramping up our capacity. Obviously, our CapEx spend this year is an eye towards the future,” Pichai said, in response. “We are constantly planning for the long-term.” Pichai added that he expects Google to “go through the year in a supply-constrained way”.
Alphabet’s chief financial officer, Anat Ashkenazi, elaborated on the ways Google is trying to free up capital. According to Ashkenazi, that includes constructing its own data centers “to ensure that we do it in the most efficient way”, having an AI-powered tool known as a “coding agent” write about half the company’s codes (before being reviewed by engineers), and using AI across departments, even for smaller tasks such as handling invoices.
“We’re seeing our AI investments and infrastructure drive revenue and growth across the board, Pichai said.
Alphabet’s annual revenue exceeded $400bn for the first time, Pichai added.
The company reported $113.83bn in revenue for the fourth quarter of 2025 – surpassing Wall Street estimates of $111.43bn. Earnings per share (EPS) also beat Wall Street expectations: the company reported $2.82 in EPS, compared with estimates of $2.63.
The report comes after several months of good news for the company in the AI race.
The newest version of Gemini, released by Google in November, is considered to be at the forefront of the generative AI industry, a development that has prompted panic at competitor OpenAI. Alphabet’s stock jumped 3% when Google debuted the model.
Then in January, Google and Apple announced the company will start using Gemini to power AI features like Siri; the Apple assistant has previously faced criticism for not being as advanced and accurate as its competitors. Google’s valuation shot up to $4tn after the deal, making it the second-most-valuable company in the world.
Analysts viewed the multi-year agreement as a huge win for Google: the tech giant beat out competitors like OpenAI, and got access to Apple’s user base of 2.5bn active devices.
“Gemini is becoming the AI engine for the world’s most successful software companies,” Pichai said on Wednesday.
Alphabet’s projected spending on AI infrastructure means its capital expenditure could as much as double this year. Shares were volatile in after-hours trading, with investors weighing the swell in spending against surging revenue and profit.
Like larger rivals Amazon Web Services and Microsoft’s Azure, Google Cloud has been grappling with capacity constraints, and Pichai said the expenditures were necessary “to meet customer demand and capitalize on the growing opportunities we have ahead of us”.
But investors have increasingly grown concerned about payoffs from AI investments, as the big cloud companies collectively spend massive amounts building out their infrastructure. Meta last week hiked capital investment for AI development this year by 73%.
As the AI arms race heats up, Google’s Gemini AI assistant app exceeded 750 million users per month, Pichai said, up by 100 million compared with November.
The driverless car division Waymo is working to integrate the AI model, and Google announced that its Chrome browser will adapt more Gemini AI features, too.
Google is still dealing with scrutiny from lawmakers and regulators; the company has faced years of legal battles with US antitrust regulators over allegations it built an illegal monopoly over online search and advertising. That fight resurged this week when the Department of Justice and several states filed an appeal to a landmark antitrust ruling last year, in which a judge imposed only modest limits on the company’s contracts. The federal government wanted tougher restrictions. Google executives did not discuss the legal proceedings on the earnings call.
