An era has dawned in the world of Big Tech where billion-dollar investments are no longer just a spreadsheet item, but a statement of survival. Alphabet, Google’s parent company, has just announced that it plans to almost double its capital expenditure (CAPEX) in the coming year, targeting an astronomical range of $175 to $185 billion. This is a bold move, given that as recently as 2025 the figure was hovering around $91 billion, and market analysts were expecting a much more modest increase.
This unprecedented escalation in spending on data centres and network infrastructure is a direct response to the bottlenecks in computing power that are currently holding the sector back. Sundar Pichai, CEO of Alphabet, has made it clear: demand for artificial intelligence is outstripping the company’s current supply capacity. These investments are intended to lay the foundations for further expansion of the Gemini model, which in its third iteration has managed to reverse the narrative of Google as a technological marauder.
A new hierarchy of hyperscalers
For market observers, the most striking dynamic is that of the cloud division. Google Cloud, recording a 48% increase in revenue (to US$17.7 billion), has officially gone from being a “promising project” to being a real threat to the position of Azure and AWS. For the first time in years, Google Cloud’s growth rate was clearly ahead of Microsoft’s, allowing the company to cement its status as a fully-fledged hyperscaler. This success is confirmed by the partnership with Apple and the fact that 2,800 corporations have already purchased a total of 8 million paid Gemini licences.
Risk vs. real returns
Investors, although initially concerned about the aggressive cash drain, seem to have become convinced of Pichai’s vision. Despite temporary volatility in the share price following the results announcement, Alphabet’s financial fundamentals remain solid. Quarterly revenue of $113.8 billion and earnings per share beating analyst forecasts suggest that AI is no longer just an experiment, but a viable revenue engine.
Artificial intelligence has even begun to redefine the company’s core business – search. With Gemini, Google is able to monetise complex, long queries that previously eluded traditional advertising algorithms. With 750 million users of the Gemini assistant per month, Alphabet is proving it can scale new tools quickly. In the current economic climate, the message from Mountain View is clear: Google is not only participating in the AI arms race, but intends to fund it with ruthless efficiency, even at the expense of short-term margins.
