Alphabet Raises AI Spending Guidance to $205 Billion

Alphabet Inc. increased its full-year capital expenditure guidance to as much as $205 billion to expand its artificial intelligence infrastructure. The investment targets servers, GPUs, CPUs, memory, Tensor Processing Units (TPUs), networking equipment, and data center construction. Management indicated that spending in 2027 will be significantly higher than in 2026 to address massive unmet demand.

This spending surge follows a rapid acceleration in Google Cloud revenue growth, which reached 82% year over year in the second quarter of 2026. This represents a steady climb from 34% in the third quarter of 2025 and 63% in the first quarter of 2026. The company reports a cloud backlog of $514 billion, driven by multiyear enterprise commitments, and expects to recognize over half of that backlog as revenue within the next 24 months.

CEO Sundar Pichai reported that approximately 90% of the Fortune 100 now utilize the Gemini Enterprise model, with customer acquisition doubling year over year. To drive further growth, Alphabet plans to sell its custom TPUs externally, which were developed in collaboration with Broadcom Inc.