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Google expects ‘significant increase’ in CapEx in 2026, execs say
Sundar Pichai, chief executive officer of Alphabet Inc., during the Bloomberg Tech conference in San Francisco, California, US, on Wednesday, June 4, 2025.
David Paul Morris | Bloomberg | Getty Images
Google parent Alphabet is planning a “significant increase” in spend next year as it continues to invest in AI infrastructure to meet the demand of its customer backlog, executives said Wednesday.
The company reported its first $100 billion revenue quarter on Wednesday, beating Wall Street’s expectations for Alphabet’s third quarter. Executives then said that the company plans to grow its capital spend for this year.
“With the growth across our business and demand from Cloud customers, we now expect 2025 capital expenditures to be in a range of $91 billion to $93 billion,” the company said in its earnings report.
It marks the second time the company increased its capital expenditure this year. In July, the company increased its expectation from $75 billion to $85 billion, most of which goes toward investments in projects like new data centers.
There’ll be even more spend in 2026, executives said Wednesday.
“Looking out to 2026, we expect a significant increase in CapEx and will provide more detail on our fourth quarter earnings call,” said Anat Ashkenazi, Alphabet’s finance chief.
The latest increases come as companies across the industry race to build more infrastructure to keep up with billions in customer demand for the compute necessary to power AI services. Also on Wednesday, Meta raised the low end of its guidance for 2025 capital expenditures by $4 billion, saying it expects that figure to come in between $70 billion and $72 billion. That figure was previously $66 billion to $72 billion.
Google executives explained that they’re racing to meet demand for cloud services, which saw a 46% quarter-over-quarter growth to the backlog in the third quarter.
“We continue to drive strong growth in new businesses,” CEO Sundar Pichai said. “Google Cloud accelerated, ending the quarter with $155 billion in backlog.”
The company reported 32% cloud revenue growth from the year prior and is keeping pace with its megacap competitors. Pichai and Ashkenazi said the company has received more $1 billion deals in the last nine months than it had in the past two years combined.
In August, Google won a $10 billion cloud contract from Meta spanning six years. Anthropic last week announced a deal that gives the artificial intelligence company access to up to 1 million of Google’s custom-designed Tensor Processing Units, or TPUs. The deal is worth tens of billions of dollars.
The spend on infrastructure is also helping the company improve its own AI products, executives said on the call.
Google’s flagship AI app Gemini now has more than 650 million monthly active users. That’s up from the 450 million active users Pichai reported the previous quarter.
Search also improved thanks to AI advancements, executives said. Google’s search business generated $56.56 billion in revenue — up 15% from the prior year, tempering fears that the competitive AI landscape may be cannibalizing the company’s core search and ads business.
AI Mode, Google’s AI product that lays within its search engine, has 75 million daily active users in the U.S., and those search queries doubled over the third quarter, executives said. They also reiterated that the company is testing ads in that AI Mode product.
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