Alphabet raises spending forecast as AI investment surges
Alphabet Boosts AI Investment: Google's parent company, Alphabet, plans to spend approximately $200 billion on AI infrastructure this year, reflecting a raised capital expenditure forecast and strong second-quarter results driven by advertising revenue and cloud services.
- Tech
- DPA
- Published Date: 08:34 AM 23 July 2026
Google parent Alphabet plans to spend around $200 billion on artificial intelligence (AI) infrastructure this year after again raising its capital expenditure forecast.
The technology giant on Wednesday reported a net profit of $112.1 billion for the second quarter, although around $99 billion of that total came from unrealized gains linked to the revaluation of investments.
Alphabet holds stakes in companies including Elon Musk's space firm SpaceX and AI developer Anthropic.
The company's underlying business also exceeded Wall Street expectations. Revenue rose 24% year-on-year to $119.8 billion, compared with analysts' average forecast of just under $117 billion.
Revenue from advertising linked to Google's search engine increased by almost 17% to $63.27 billion.
Google has faced growing competition from AI-powered services that provide direct answers to users' questions rather than lists of links. However, the company has also integrated AI features into its own search engine, helping it expand its core business.
Alphabet's cloud revenue jumped by around 82% to $24.77 billion, well above analysts' average forecast of about $22.2 billion.
Chief executive Sundar Pichai said Alphabet's AI investments were "redefining what's possible across every part" of the company.
"These outstanding results show that our differentiated, full stack approach to AI is delivering real, measurable value for consumers, customers, and our partners globally."
Alphabet now expects capital expenditure of between $195 billion and $205 billion this year. Spending is set to rise significantly again next year, chief financial officer Anat Ashkenazi said.
The forecast had already been raised earlier this year from between $175 billion and $185 billion to between $180 billion and $190 billion.
Alphabet spent almost $45 billion on expansion in the second quarter.
The company's shares fell around 2% in after-hours US trading following the latest increase in its spending forecast.
Rising costs for components such as memory chips have also contributed to higher expenditure, as shortages caused by surging demand for AI data centres push up prices.