Alphabet fully commits to generative AI in 2026 and doubles its investments in data centers and computing power.
Alphabet announces that it is increasing its capital expenditures for 2026 to 175 to 185 billion dollars, approximately double last year’s amount. The money will go towards new data centers and hardware to support both its own services and partners such as Apple, OpenAI, and Anthropic.
Data Centers and AI Hardware
According to CFO Anat Ashkenazi, about 60 percent of the budget, approximately 105 to 111 billion dollars, will go to rapidly depreciating assets such as servers. The remaining 40 percent is earmarked for the construction and network infrastructure of new data centers. These servers consist of a mix of Google’s own TPUs and Nvidia‘s GPUs. Capacity will be equally divided between internal workloads and Google Cloud.
Late last year, Alphabet acquired Intersect, a company focused on data center and energy infrastructure. This allows Alphabet to focus on new technologies to expand and distribute energy supply outside the US.
CEO Sundar Pichai admitted that scaling computing power remains a persistent concern, especially due to limitations around energy, available land, and supply chains. Nevertheless, Alphabet sees AI as a core driver for future growth.
AI Boosts Ads and Cloud
Generative AI is not only integrated into products but also used to improve advertisements. According to Google, Gemini models ensure more relevant ads, especially for more complex search queries and in non-English languages. This resulted in a 13 percent increase in advertising revenue to 82.28 billion dollars in the quarter.
Google Cloud also performed strongly: revenue rose by 47 percent to 17.66 billion dollars, driven by AI and enterprise demand. For the full year 2025, Alphabet reported 402.84 billion dollars in revenue and 132.17 billion dollars in profit.