Alphabet is ramping up its capital spending to an impressive $180 billion by 2026 — financial results indicate that the company’s AI initiatives might be yielding returns

During Google's Q4 earnings call last week, the company revealed it anticipates increasing its 2025 capital spending to $185 billion, as reported by Reuters. This is roughly $70 billion above what analysts predicted, and although it caused Alphabet’s stock to drop 3%, it’s among the few firms heavily betting on AI that have still maintained stocks rise over the past six months.

This isn’t the sort of wanton spending that the early AI infrastructure deals of 2025 seemed like, though. Google possesses actual data, and to some degree, real revenue to support their claims. Its cloud computing business expanded nearly 50% in the final quarter of 2025 to $17.7 billion, with total revenue hitting $114 billion — a rise of nearly $20 billion from the prior quarter.

Perhaps more crucially for infrastructure deployment and investment, Google asserts it has cut the serving unit costs for Its Gemini AI by 78% across 2025 through enhanced model optimization and efficiency.

With reports that its Gemini monthly users have now hit 750 million, Google is nearing ChatGPT’s leading 800 million+ user base and broad mental dominance. Although no true victor has emerged in the AI race yet (save for perhaps Nvidia), Google appears to be gaining ground, and this lead could intensify further this year as it keeps increasing its investments.

The full stack approach

Unlike other notable AI companies, Google enjoys the advantage of introducing what it refers to as a "full stack approach" to AI. Google possesses its own AI software and Tensor Processing Units (TPU), making it less dependent on Nvidia and other AI accelerator makers—though it remains a major purchaser of Nvidia GPUs and is securing some of the First Vera Rubin GPUs later this year.

Alphabet also maintains a pre-existing network of data centers that deliver cloud-based services to both consumers and businesses. It boasts a thriving cloud computing sector, which it can integrate Gemini into as an additional offering. Gemini is also included in Google One’s current subscription plan, providing access to users who already pay for cloud storage. It also connects Gemini with its existing productivity tools. It’s probably going to be the primary AI choice on every smartphone once the Apple deal is done.

This provides Google with additional avenues to monetize AI as well, allowing it to integrate the technology into existing Google service subscriptions to encourage uptake. It can combine it with its advertising platforms to create additional revenue opportunities. Alphabet’s chief business officer, Phillip Schindler, told analysts during the earnings call that Gemini was enabling Google to serve ads for longer, more intricate search queries that had once been difficult to Monetize.

All of this has positioned Google to sustain its remarkable momentum in AI spending through 2025, making it an outlier. As Reuters reports, Google stood out as the sole company to raise its capital spending in Q4. Given the scale of its planned capital expenditure for 2026, even some of the biggest firms might struggle to keep pace.

Even Google needs growth

During the earnings call, Alphabet’s finance chief, Anat Ashkenazi, informed analysts that Google was dealing with a cloud computing backlog totaling $240 billion. Those are commitments the company has promised to fulfill but currently lacks the capacity to manage.

Most of Google's planned spending in 2026 will go toward clearing this backlog and boosting AI computing capacity for Google DeepMind. Ashkenazi further emphasized that Google’s 2025 investment centered on technical infrastructure such as servers, data centers, and networking hardware.

Google's head of AI Infrastructure, Amin Vahdat, told staff in November that Google would have to scale its AI serving capacity by twice as much every half-year to keep up with the demands on its cloud computing units. Even considering Google’s planned investment and efficiency gains from the newest models, that’s a steep challenge.

Despite the backlog, Google continues to accept additional orders for capacity. Google’s backlog for its cloud computing division in Q3 2025 stood at just $155 billion. That’s over $100 billion in unfilled orders within just a few months. Escaping this successful predicament may be Google’s sole path ahead.

"We've been supply-constrained, even as we've been ramping up our capacity," Google CEO Pichai said during the recent earnings call. "Obviously, our capex spend this year is an eye towards the future."

Google may be at the forefront of this competition, but no endpoint is visible, and despite real revenue flowing from its AI divisions and intentions to grow that further, the costs needed to sustain momentum in AI Is astonishing. When even several trillion-dollar corporations are going in circles, it’s difficult to predict how everything will ultimately unfold.