Alphabet’s big capex and AI push

Alphabet heads into its April 29 earnings report with Google Cloud growing faster and Search still expanding, even as it plans up to $185 billion in 2026 spending. (abc.xyz) On February 4, Alphabet said fourth-quarter 2025 revenue rose 18% to $113.8 billion, with Google Services up 14% to $95.9 billion and Google Cloud up 48% to $17.7 billion. Full-year 2025 revenue reached $402.8 billion, the first time the company topped $400 billion. (abc.xyz) Alphabet also told investors it expects 2026 capital expenditures of $175 billion to $185 billion, after spending $91.45 billion in 2025. Reuters reported analysts had expected about $115.26 billion, making Alphabet’s plan far larger than Wall Street had penciled in. (abc.xyz) (newsbreak.com) The spending is aimed at the machinery behind artificial intelligence: servers, data centers and networking gear that let Google train models and answer user requests at scale. Reuters reported Alphabet executives tied the 2026 budget directly to demand for AI computing power in Cloud and across Google’s products. (newsbreak.com) The revenue side of that bet is already showing up in Cloud and Search. In the fourth quarter, Google Search and other revenue grew 17%, and Chief Executive Sundar Pichai said Search “saw more usage than ever before,” while Cloud ended 2025 at an annual run rate of more than $70 billion. (abc.xyz 1) (abc.xyz 2) Google has been adding artificial intelligence directly into search results for months. In the first-quarter 2025 earnings call on April 24, 2025, Pichai said AI Overviews had more than 1.5 billion users per month, and he said the early response to AI Mode was positive. (abc.xyz) Cloud is the other half of the story because companies rent computing power there to build and run their own artificial intelligence systems. Alphabet said fourth-quarter Cloud growth was led by Google Cloud Platform demand for enterprise AI infrastructure, enterprise AI solutions and core cloud products. (abc.xyz) The scale of the buildout has also sharpened investor concerns about cost. CNBC reported the top end of Alphabet’s 2026 capital spending forecast would be more than double its 2025 level, testing whether Wall Street will keep rewarding higher revenue growth while margins face pressure from data center expansion. (cnbc.com) Alphabet’s own filings show why investors are willing to watch the spending closely instead of dismissing it outright. The company finished 2025 with operating income of $129.0 billion and fourth-quarter net income growth of 30%, giving it more room than most rivals to fund a large infrastructure cycle from current cash generation. (sec.gov) (abc.xyz) The next test is April 29, when Alphabet reports first-quarter 2026 results. Investors will be looking for the same two numbers that define this story now: whether Cloud and Search keep growing fast enough, and whether the company can turn a record infrastructure bill into revenue at the same pace. (abc.xyz)