Alphabet just told investors it's planning to spend a lot more in 2026 than Wall Street expected, and yes, it's because of AI. The extra cash is earmarked for data centers, custom chips, hiring, and infrastructure that actually runs these giant models.
AI finds religion: Alphabet is treating AI like a religion now, and money is the offering. The company is shifting from occasional donations to full worship - meaning heavy, sustained investment.
Is it time to freak out?
Not yet. Short answer: higher spend will annoy value investors because margins might compress. But long answer: this is exactly what you'd expect from a company trying to own the future platform layer.
Alphabet can afford growing pains. It has ad cashflow, a dominant search franchise, and deep pockets. If AI becomes the next big platform, the companies that built the infrastructure early win. That’s the upside - faster product improvements, better models, and bigger moat.
But it's not risk-free. Big capex cycles come with execution risk. Data-center builds take time. Recruiting top AI talent is expensive and competitive. And regulators are watching a company that’s expanding AI influence across search, ads, cloud, and devices.
Bottom line: Alphabet is betting big on AI and spending like it. If you want quick profits, this is annoying. If you want a play on long-term platform dominance, this is the exact kind of all-in move you'd expect.
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