Alphabet to nearly double 2026 spending to $185B on AI
What's the story
Google's parent company, Alphabet, is set to double its capital expenditure in 2026. The tech giant plans to invest between $175 billion and $185 billion in capital expenditures in 2026, CEO Sundar Pichai announced. This is a sharp increase from the $91.5 billion spent last year. The move comes as part of Alphabet's strategy to stay ahead in the highly competitive artificial intelligence (AI) sector.
Strategic allocation
Investment in AI compute capacity
Alphabet's CFO Anat Ashkenazi said the company will invest in AI compute capacity. This infrastructure will support frontier model development by Google DeepMind, improve user experience, and drive higher advertiser ROI across Google services. The aggressive investment comes on the back of strong revenue growth, especially in its Google Cloud business which saw a 48% jump to $17.7 billion in Q4 2025.
Financial milestone
Record revenue for Alphabet in Q4 2025
In 2025, Alphabet's annual revenue crossed the $400 billion mark for the first time, reaching $402.8 billion in sales. This financial success has been driven by a surge in Google Cloud Platform (GCP) across enterprise AI infrastructure and solutions as well as core GCP products. The company also reported total revenue of $113.8 billion for the quarter, an 18% year-on-year increase with net income growing by 30%.
AI dominance
Gemini model gaining traction
Google has made significant strides in the AI race with powerful frontier models like Gemini 3 leading major AI benchmarks. The launch of Gemini 3 was a major milestone, Pichai said, adding that their first-party models now process over 10 billion tokens per minute via direct API use by customers. The Gemini app also now boasts over 750 million monthly active users, up from 650 million in October.
Strategic partnership
Partnership with Apple to enhance Google Cloud's growth
Last month, Google announced a multi-year partnership with Apple. The next generation of Apple Foundation Models will be based on Google's Gemini models and cloud technology. These models are expected to power future Apple Intelligence features, including an improved Siri later this year. Pichai said that Google Cloud is now on an annual run rate of $70 billion with a 55% increase in service's backlog to $240 billion.