Alphabet, Google’s parent company, delivered a stronger-than-expected fourth quarter, beating Wall Street forecasts on revenue, earnings per share, and cloud growth. Yet, these results failed to reassure investors. Alphabet’s shares slipped in extended trading on Wednesday as the company unveiled a massive new spending outlook for artificial intelligence infrastructure.
The pressure point was capital expenditure. Alphabet said it expects 2026 capital expenditures (capex) to range between $175 billion and $185 billion, more than double its 2025 spending at the upper end. While the company had previously flagged a ‘significant increase,’ the new range surpassed expectations, outpacing forecasts from hyperscaler peers.
The projection resets the bar for Big Tech. Microsoft recently said its capex would decline sequentially after spending $37.5 billion last quarter, without offering a full-year outlook. Meta guided for $115–$135 billion in 2026, with analysts expecting Amazon to lift spending to about $146.6 billion. Alphabet’s top-end figure now sits well above the pack.
The reaction reflects broader market nerves. Despite generally upbeat tech earnings, software stocks have lost nearly 30% of their value over the past three months amid fears that AI disruption could make heavy investment riskier. Alphabet, a 2025 outperformer, now appears less insulated.
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Google Cloud reported a 55% sequential jump in backlog to $240 billion, more than doubling year-on-year. Cloud revenue rose almost 48%; CFO Anat Ashkenazi said most 2026 spending will fund AI compute for Google DeepMind, expand cloud capacity, and improve advertiser returns.
Executives highlighted traction. Gemini, Google’s flagship AI app, now counts 750 million monthly active users. CEO Sundar Pichai also reiterated Alphabet’s partnership with Apple to upgrade Siri using Gemini models.
Still, Pichai summed up the challenge simply: ‘Compute capacity.’ In the AI race, demand is booming, but so is the bill.