Key takeaways
- Alphabet forecast $175–185 billion in 2026 capital expenditure, blowing past the $119.5 billion analysts expected
- Google Cloud revenue surged 48% to $17.7 billion, outpacing Microsoft Azure’s growth for the first time in years
- Gemini now has 750 million monthly active users and serving costs dropped 78% over 2025
Alphabet just told the world exactly how much it’s willing to bet on AI: nearly half a billion dollars per day.
In its fourth-quarter earnings report on Wednesday, Google’s parent company announced capital expenditure plans of $175 billion to $185 billion for 2026. That’s roughly double its 2025 spend of $91 billion — and about $60 billion more than what analysts had projected.
To put that in perspective, only 59 other companies in the S&P 500 have a market cap smaller than what Alphabet plans to spend on infrastructure this year.
The money will go toward AI compute capacity for Google DeepMind, cloud infrastructure, and data centers. CFO Anat Ashkenazi said roughly 60% of infrastructure investment in Q4 went to servers, with 40% going to data centers and networking equipment.
The actual quarterly results were strong. Revenue came in at $113.8 billion, up 18% year over year, beating the $111.4 billion estimate. Earnings per share hit $2.82 versus the $2.63 expected. Net income rose 30% to $34.5 billion.
The standout was Google Cloud, which grew 48% to $17.7 billion in revenue — well ahead of the 35% jump analysts expected and faster than Microsoft Azure’s growth for the first time in years. Cloud backlog more than doubled year over year, reaching $240 billion.
Much of the momentum traces back to November’s launch of Gemini 3, which outperformed rival models on benchmarks and reportedly prompted OpenAI CEO Sam Altman to issue an internal “code red.” The Gemini app now has over 750 million monthly active users, up from 650 million last quarter. CEO Sundar Pichai noted that serving costs for Gemini dropped 78% over 2025 through model optimizations and efficiency gains.
Alphabet also struck a deal to power Apple’s revamped Siri assistant with Gemini models — a partnership that taps into Apple’s installed base of over 2.5 billion devices.
Despite beating on every major metric, Alphabet shares dipped in after-hours trading as investors weighed the sheer scale of the spending commitment. The software sector has already lost 30% of its value in the last three months amid fears that AI tools will make existing software obsolete.
The message from Google is clear: the AI race is far from over, and they intend to outspend everyone in it.
Source CNBC
