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Alphabet Surprises with USD 85 Billion Capital Spending Boost After Strong Earnings

  • tech360.tv
  • 2 days ago
  • 2 min read

Alphabet Inc. announced a sharp increase in capital spending to about USD 85 billion for 2025, citing surging demand for its cloud computing services.


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Credit: GOOGLE

The move came as the Google parent reported second-quarter revenue and profit that exceeded Wall Street expectations, driven by strong performance in its cloud and advertising businesses.



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Credit: GOOGLE

Google Cloud revenue jumped nearly 32%, surpassing estimates of a 26.5% rise, and helped push Alphabet’s total revenue to USD 96.43 billion for the quarter ended June 30.


The company had previously pledged about USD 75 billion in capital spending for the year, but Chief Executive Officer Sundar Pichai said the increase reflects growing demand for its cloud products and services.


Chief Financial Officer Anat Ashkenazi said capital expenditures are expected to rise further in 2026, as Alphabet continues to face more demand than it can supply.


Shares initially dipped in extended trading after the report but rebounded as executives highlighted strong cloud growth during a call with analysts.


The capital spending increase surprised investors, with Aptus Capital Advisors portfolio manager Dave Wagner noting the unexpected USD 10 billion jump in guidance.


The rise of artificial intelligence has fuelled demand for cloud services, and Google Cloud has been expanding its offerings, including its in-house TPU chips that compete with Nvidia’s GPUs.


Pichai said Google Cloud grew its customer count by 28% quarter over quarter, and its AI portfolio has been a key driver of demand.


In a notable development, OpenAI recently added Google Cloud to its list of cloud capacity suppliers, marking a rare collaboration between rivals in the AI space.


Despite concerns about the pace of monetisation, Alphabet and other tech giants continue to defend their aggressive AI investments as necessary for long-term growth.


Google’s AI features, including AI Overviews and AI Mode, are helping the company maintain user engagement amid rising competition from chatbots like ChatGPT.


AI Mode reached 100 million monthly active users just two months after its large-scale rollout, while Google’s Gemini chatbot now has over 450 million monthly users.


Advertising revenue, which accounts for about 75% of Alphabet’s total sales, rose 10.4% to USD 71.34 billion, beating expectations of USD 69.47 billion.


Alphabet reported earnings of USD 2.31 per share, topping analysts’ estimates of USD 2.18 per share.

  • Alphabet raised 2024 capital spending to USD 85 billion, up from USD 75 billion

  • Google Cloud revenue surged nearly 32%, beating expectations

  • AI features and advertising helped drive Alphabet’s strong Q2 results


Source: REUTERS

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