Alphabet plans to spend $185 billion on artificial intelligence, but the CEO says that won’t be enough

alphabet is the latest example. During his presence on Wednesday Q4 earnings callCEO Sundar Pichai and CFO Anat Ashkenazi revealed that the $4 trillion tech giant will spend between $175 billion and $185 billion on… capex In 2026, the $91.4 billion it spent in 2025 will probably double, a far cry from the $52.5 billion spent through 2024. In the fourth quarter alone, Alphabet’s capital investment reached $27.9 billion.

The move is part of what Pichai described as maintaining a brutal pace of competition in artificial intelligence, which is leading everyone The dominant player in the space—Alphabet, Anthropy, OpenAI, dead, MicrosoftAnd others – to invest heavily in innovation and infrastructure in light of fierce competition moving from one quarter to another.

“We’re in a very relentless pace of innovation, and I think we’re confident in maintaining that momentum as we go through 2026,” Pichai said on the company’s fourth-quarter earnings call on Wednesday.

At the same time, when asked what keeps him up at night during the call, Pichai’s response showed his concern about the increased capital expenditures and the longer timeline needed to turn that investment into actual working data centers, to overcome power bottlenecks, ramp up chip manufacturing, and master the skills needed to make it all happen.

“I think specifically at this moment, probably the most important question is definitely around computing power (and) all the constraints — whether it’s energy, land, or supply chain constraints,” Pichai said. “How can we ramp up to meet this extraordinary demand at this moment, get our investments right for the long term, and do it all in a way that we drive efficiencies and do it in a world-class way?”

Pichai admitted to investors that all these restrictions will continue to be a problem for Google Deep Mind The artificial intelligence laboratory as well as the company’s cloud services unit, despite the huge increase in spending and huge demand.

“I expect to spend the year in a limited supply fashion,” Pichai said.

Alphabet’s massive increase in AI infrastructure spending sets a new high water mark after just one week Meta stunned the street By announcing plans to Almost double the capital expenditure To between $115 billion and $135 billion this year.

Investors seemed unsure how to respond to Alphabet’s plans. The stock initially fell more than 6% in after-hours trading on Wednesday, then rose more than 2% as Pichai and his team spoke during the earnings call, but fell slightly back into the red, down 0.4%.

The company beat Wall Street’s profit and revenue targets during the last three months of 2025 and had a record year, with annual revenue exceeding $400 billion for the first time ever, and net income growing 15% to $132.2 billion. YouTube It has exceeded the annual revenue threshold of $60 billion. The total number of subscriptions across consumer services rose to more than 325 million, supported by cloud storage company Google One and YouTube Premium. Services revenue rose 14% to $95.9 billion, partly due to 17% growth in Google search.

Investing in AI ‘is already getting results’

Alphabet executives emphasized the various ways in which massive AI investments are translating into benefits for the company. The company said that Google users search in AI mode more than traditional web searches, and spend more time on Google sites. Business customers benefit from Google Cloud’s AI capabilities and use more products in the portfolio.

“It’s already driving results across the business,” CFO Ashkenazi said during the call regarding the company’s AI spending.

According to Ashkenazi, the majority of Alphabet’s capital spending was invested in technology infrastructure, with about 60% going to servers and 40% going to data centers and networking equipment. These investments support “the development of the frontier model by Google DeepMind, ongoing efforts to improve the user experience and increase advertiser (ROI) on Google services, significant demand from cloud customers, as well as strategic investment and other bets,” Ashkenazi said.

She added that cloud backlog — future contracted orders that demonstrate demand — rose 55% in the quarter and more than doubled year-over-year, to $240 billion at the end of the fourth quarter.

The quarter culminated with some major news from Alphabet in other regions. Last month, Google and apple Troops joined To announce that the two giants will use Google’s AI to power Apple’s Siri and other AI services. Apple has access to 2.5 billion devices, which could be huge for Gemini. This month, autonomous robotics subsidiary Waymo Announce It raised $16 billion in an investment round that valued the company at $126 billion, led by Alphabet.

Ahead of Alphabet’s earnings announcement after the market closed on Wednesday, a broad sell-off sent various technology stocks lower for the second day in a row. The technology sell-off is due to fears that artificial intelligence will do this Disable programs And data companies like Sales force and Service now.

Pichai addressed the issue on the earnings call, noting that AI is an “enabler,” not necessarily a threat, and that the best companies will integrate it into their workflow. This will make them better cloud customers, he said. “I think companies that seize this moment have the same opportunity ahead,” Pichai said.