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Technology

Alphabet raises AI spending target to $205 billion amid surging cloud demand

hellohimachalse@gmail.com 24 Jul 2026 24 Jul 2026

Alphabet, Google‘s parent company, has raised its capital expenditure (capex) forecast for 2026 to a range of $195 billion to $205 billion—up from the previous estimate of $180 billion to $190 billion—as it ramps up investments in artificial intelligence (AI) infrastructure.

This increased spending reflects the growing demand for AI computing capacity, as Google competes with Microsoft, Amazon, and Meta to expand data centres and support increasingly complex AI models.

“We have significantly increased our capacity over the past three years. Demand continues to outpace that investment,” said Anat Ashkenazi, Alphabet’s CFO, during the company’s earnings call on July 22, as reported by a famous publication.

Cloud growth drives a bigger bet on AI

Alphabet’s choice comes after better-than-expected results in its cloud business. Google Cloud income went up 82% compared to the period last year to 24.8 billion dollars in the April-June quarter—much higher than what people expected—because more companies are spending on AI-related cloud services.

The company’s overall income was 119.8 billion dollars and advertising income stayed strong at 81.6 billion dollars.

Ashkenazi said that customers are asking for more AI infrastructure than what’s available which made the company decide to invest more quickly after adding new computing power faster than expected. The report also said that spending on equipment is likely to increase in 2027.

Investor concerns over rising costs

The company made a lot of money. People who invest in Alphabet are worried about the plan to spend more. This is why Alphabet shares went down after the company said they would spend money. Investors are concerned that the company is spending much on Artificial Intelligence and this might mean they do not get their money back for a while even though the company is making a lot of money.

Alphabet spent a lot of money on Artificial Intelligence. This meant they did not have a lot of extra money left over during the quarter. They actually spent $5.9 billion more than they got in. The company made $2.85 per share which’s a little less than what people who watch the company thought they would make. Google is competing with companies like OpenAI and Anthropic especially when it comes to Artificial Intelligence tools that help with coding. This is partly because Google delayed the launch of its Gemini 3.5 Pro model, which was reported by a famous publication.

Google CEO Sundar Pichai stated that the company has already begun training Gemini 4, and Alphabet remains committed to staying at the forefront of AI development.

Alphabet’s recent increase in spending comes as technology companies continue to pour record amounts of capital into AI infrastructure. According to the report, industry estimates suggest that tech giants will spend well over $700 billion on AI this year, with investment projected to exceed $1 trillion next year as competition intensifies.

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