Alphabet is expanding borrowing as it scales its artificial intelligence infrastructure while warning that AI can reshape its advertising engine and raise execution risks. The update follows the company’s latest annual report and fourth-quarter results.
Alphabet said online advertising generated more than 70% of 2025 revenue, and it warned that AI is reshaping how ads reach users. The company said it and its competitors keep updating ad formats and targeting methods to match the shift. Alphabet said it cannot assure investors that new formats, strategies, or offerings will succeed.
Alphabet also said product innovation can change user behavior and revenue trends. That risk matters as consumers use generative AI tools inside and outside Search. In the fourth quarter, Google's advertising revenue rose to $82.284 billion from $72.461 billion a year earlier. Alphabet also reported consolidated revenue of $113.8 billion for the quarter.
Alphabet tied its AI rollout to rising infrastructure commitments. In its annual report, the company said it is entering “significant leasing arrangements” with third-party operators to meet AI training and inference demand, alongside traditional cloud services. Alphabet said these arrangements can raise costs and add operational complexity.
Alphabet also warned that long-duration commercial agreements can increase liabilities if Alphabet, vendors, or counterparties fail to perform. It said a downturn or contract issues could leave it with “excess capacity” that it cannot easily redeploy. The filing also warned that missed payments from counterparties or customers could add strain.
Executives echoed the constraints on the February 4 earnings call. Chief executive Sundar Pichai said “compute capacity” keeps leaders focused on power, land, and supply chain limits, and he described the challenge of scaling quickly. Chief financial officer Anat Ashkenazi said Alphabet weighs investment levels against cash flow and balance sheet strength.
Also Read: Alphabet Doubles AI Capex to $185B, Now Outspends Meta & Amazon Combined
Alphabet returned to the US debt market on February 9, 2026, with a $20 billion bond sale across multiple maturities. The offering included seven tranches that extend from 2029 to 2066, according to people familiar with the transaction. Market participants also discussed an option for a long-dated sterling issue.
Alphabet linked the funding push to a steep rise in capital spending. In November 2025, the company issued senior unsecured notes that generated $24.8 billion in net proceeds. In prepared remarks, Pichai said Alphabet expects 2026 capex in a $175 billion to $185 billion range to expand technical infrastructure and meet demand.
The company said AI investments already support growth across products such as Search and Cloud. The earnings release also cited 750 million monthly active users for the Gemini app.