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 far above analysts’ forecast of around $115bn, marking another escalation in spending by one of the world’s technology giants.
The announcement came alongside strong fourth-quarter results. Revenue rose 18 per cent year-on-year to $113.8bn, slightly ahead of forecasts of $111.3bn. Net income climbed 30 per cent to $34.5bn, comfortably beating analyst expectations of $31.9bn. Despite the earnings beat, Alphabet shares fell 1.4 per cent in after-hours trading, reflecting investor concern over the scale of planned investments.
Under CEO Sundar Pichai, Alphabet has positioned itself as a leading force in AI following earlier fears that start-ups such as OpenAI could disrupt its core search business. Central to the company’s strategy is its Gemini AI model. The Gemini AI assistant app exceeded 650 million monthly users in November, while the AI Overviews feature within Google Search now reaches more than 2 billion monthly users.
Alphabet is also investing heavily in custom AI chips and data centre infrastructure, areas analysts say are crucial for sustaining long-term growth. Last month, Google struck a high-profile deal with Apple to power an upgraded version of Siri using Gemini models, opening access to Apple’s more than 2.5 billion devices.
Nikhil Lai, principal analyst at Forrester, said the results showed 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 climbed more than 64 per cent over the past year, pushing its market capitalisation above $4tn, second only to Nvidia at around $4.3tn. However, broader sentiment towards AI stocks has grown cautious. Microsoft reported slower cloud growth last week, prompting a sell-off, while other companies including Advanced Micro Devices and Palantir faced declines over concerns about heavy AI spending.
Jed Ellerbroek, portfolio manager at Argent Capital, described Alphabet’s AI infrastructure expansion as “unprecedented.” He said, “The market is having a hard time knowing where to price these stocks and what the future looks like. There’s growing scepticism about whether the rally has peaked.”
For Alphabet, the strategy is clear: invest aggressively to secure leadership in AI. How investors respond will depend on how quickly these massive capital commitments translate into durable returns. The company’s continued focus on Gemini and AI infrastructure underlines its ambition to remain at the forefront of a technology race that is reshaping the global economy.
