Google parent Alphabet topped Wall Street forecasts for fourth-quarter revenue, earnings per share, and cloud results. Shares fell sharply in after-hours trading on Wednesday, however, after the firm projected record capital spending on AI infrastructure for 2026.
The company expects outlays of $175 billion to $185 billion next year—potentially over twice 2025 levels. This tops October guidance of “a significant increase” and outpaces peers.
Microsoft noted a quarterly dip after $37.5 billion spent recently, while Meta plans $115-135 billion. Amazon’s 2025 capex should hit $124.5 billion, rising 18 per cent to $146.6 billion.
Investors fret over AI costs, with software stocks down 30 per cent in three months despite strong tech earnings. CNBC’s Michael Santoli linked this to fears AI will disrupt legacy tools. Alphabet, a 2025 top performer, saw shares drop over six per cent.
Google Cloud backlog jumped 55 per cent quarter-on-quarter to $240 billion, doubling yearly, with revenue up nearly 48 per cent. Finance chief Anat Ashkenazi said 2026 funds would boost DeepMind compute, meet “significant cloud customer demand as well as strategic investments in other bets,” and “improve the user experience and drive higher advertiser ROI in Google services.”
“The vast majority of our capex was invested in technical infrastructure with approximately 60% of that investment in servers and 40% in data centers and networking equipment in Q4,” Ashkenazi said.
Gemini app hit 750 million monthly users, up from 650 million. CEO Sundar Pichai highlighted the Apple Siri deal and named “compute capacity” the biggest worry. “Be it power, land, supply chain constraints, how do you ramp up to meet this extraordinary demand for this moment?” he said.
Alphabet bought data centre firm Intersect for $4.75 billion in December. AI head Amin Vahdat stressed doubling capacity every six months.
“The competition in AI infrastructure is the most critical and also the most expensive part of the AI race,” Vahdat said.
Tech firms push ahead on infrastructure to lead in AI, despite market jitters.