New Delhi, July 23(APAC Media): Alphabet has raised its capital spending forecast for 2026 after reporting stronger-than-expected growth in its cloud business, signalling that demand for AI infrastructure continues to rise.
The Google parent now expects capital expenditure to reach $195 billion to $205 billion in 2026, up from its earlier guidance of $180 billion to $190 billion. The additional spending will be used to expand AI infrastructure, including data centres and computing capacity, to meet growing demand for AI services.
The revised forecast follows a strong April-June quarter, with Google Cloud revenue rising 82 per cent year-on-year to $24.8 billion, ahead of market estimates. Alphabet’s total revenue increased to $119.8 billion, while its advertising business generated $81.6 billion, showing that its core business remains strong even as AI investments continue to increase.
Chief Financial Officer Anat Ashkenazi said customer demand for AI computing capacity is still higher than the company’s available infrastructure. She added that Alphabet expects capital spending to increase further in 2027 as it continues to expand its AI capabilities.
The higher investment, however, has raised concerns among investors. Alphabet reported negative free cash flow of $5.9 billion during the quarter as spending on AI infrastructure accelerated, and its shares slipped in extended trading after the earnings announcement.
The company is also facing increasing competition from Microsoft, Amazon, OpenAI and Anthropic in the AI market. Google CEO Sundar Pichai said Alphabet has already started training Gemini 4, indicating that the company plans to continue investing heavily in AI as competition for cloud and AI leadership intensifies.
