Alphabet says it will keep ramping up AI spending, with capital expenditure set to rise significantly next year as Google remains capacity constrained by demand for compute.
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01Summary
- 01Alphabet is spending roughly $200 billion this year on its AI buildout, Ruth Porat said at Fortune’s Most Powerful Women Summit on Monday.
- 02Porat said capital expenditure will “increase significantly” next year and that Alphabet is still “capacity constrained”.
- 03Alphabet lifted its 2026 capex outlook to as much as $205 billion in July, and its shares fell more than 6% the next day.
- 04In the second quarter, Alphabet’s capex reached $44.9 billion and free cash flow turned negative $5.9 billion for the first time as a public company.
- 05Google Cloud revenue rose 82% to $24.8 billion, while operating profit more than tripled to $8.8 billion.
02Why it matters
The scale of spending shows how heavily Alphabet is betting on AI to support future growth, even as investors question near-term returns. The figures also matter because they are already affecting cash flow and market sentiment.
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