Alphabet Doubles Down on AI With Up to $185B Spend in 2026

Alphabet, the parent company of Google, is going all in on generative AI in 2026. The company announced plans to spend between $175 billion and $185 billion next year, nearly double what it spent last year.

The capital will be used mainly to build new data centers and buy equipment to support AI workloads. This infrastructure will power Google’s own products as well as services for partners such as Apple, OpenAI, and Anthropic.

During Alphabet’s earnings call, CFO Anat Ashkenazi said around 60% of the budget will go toward servers and other fast-depreciating equipment. The remaining 40% will be spent on building and networking new data center facilities to simplify cloud communication and collaboration.

A large share of the server investment will support AI systems. This includes Google’s own TPUs and Nvidia GPUs. The computing power will be split evenly between Google’s internal needs and its Google Cloud platform.

However, scaling AI infrastructure comes with challenges. CEO Sundar Pichai said the biggest concern is meeting demand while managing limits around power supply, land availability, and supply chains.

Beyond infrastructure, Alphabet is also using generative AI to improve its advertising business. According to Google’s chief business officer Philipp Schindler, the Gemini AI model is helping deliver more relevant ads in search results.

This strategy appears to be working. Alphabet’s advertising revenue across Google Search, YouTube, and its ad network reached $82.28 billion in the quarter, up more than 13% from last year.