Alphabet has unveiled plans to spend between $175bn and $185bn this year, sharply exceeding Wall Street expectations as it intensifies its push in the global artificial intelligence race.
The capital expenditure target is well above analysts’ average forecast of about $115bn, according to LSEG data, and marks another escalation in spending among the world’s technology hyperscalers.
The announcement came alongside strong fourth-quarter results. Revenue rose 18 per cent year-on-year to $113.8bn, narrowly ahead of forecasts of $111.3bn. Net income climbed 30 per cent to $34.5bn, comfortably beating expectations of $31.9bn.
Despite the earnings beat, Alphabet shares slipped 1.4 per cent in after-hours trading, reflecting investor unease over the scale of spending commitments.
Under chief executive Sundar Pichai, Alphabet has repositioned itself as a leading force in AI after earlier concerns that start-ups such as OpenAI might disrupt its core search business.
Google’s Gemini model has become a central pillar of its strategy, with the Gemini AI assistant app exceeding 650 million monthly users in November. Its AI Overviews feature within search has reached more than 2 billion monthly users.
The company is also investing heavily in custom AI chips and data centre infrastructure, which investors hope will drive future growth.
Last month, Google secured a high-profile partnership with Apple to power an upgraded version of Siri with Gemini models, opening access to Apple’s installed base of more than 2.5 billion devices.
Nikhil Lai, principal analyst at Forrester, said the results demonstrated resilience in Alphabet’s core advertising business. “Record ad revenue signals sustained momentum in search and solid performance from YouTube,” he said, noting that YouTube’s scale now exceeds that of Netflix.
Alphabet’s shares have surged over the past year, rising more than 64 per cent and pushing its market capitalisation above $4tn — second only to Nvidia, valued at around $4.3tn.
However, wider market sentiment towards AI stocks has turned more cautious. Last week, Microsoft reported slower cloud growth, prompting a sell-off amid concerns about the sustainability of heavy AI investment. While Meta reassured investors with upbeat revenue guidance, other names struggled.
The S&P 500 and Nasdaq both declined as investors reassessed lofty valuations. Shares in Advanced Micro Devices fell sharply after a weak revenue outlook, while Palantir also dropped on AI spending concerns.
Jed Ellerbroek, portfolio manager at Argent Capital, said the scale of AI infrastructure build-out was unprecedented. “The market is having a hard time knowing where to price these stocks and what the future looks like,” he said. “There’s growing scepticism about whether the rally has peaked.”
For Alphabet, the strategy is clear: double down on infrastructure to secure long-term AI leadership. Whether investors remain willing to fund that ambition at such scale will depend on how quickly those vast capital commitments translate into durable returns.
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Alphabet ramps up AI spending with up to $185bn capital plan