Google Raises 2026 Capital Spending to $85 Billion Amid Cloud and AI Boom

Google is significantly increasing its capital spending for 2025, raising its projection to $85 billion from the $75 billion forecast earlier this year. The increase is driven by surging demand for the company’s cloud services, which have created a backlog worth $106 billion, according to Alphabet Chief Financial Officer Anat Ashkenazi. The additional spending will primarily go toward servers and data center infrastructure to support the growing adoption of AI-powered solutions. During its second-quarter earnings report, Google revealed that cloud revenues grew 32% year-over-year, reaching $13.6 billion. This sharp increase underscores how AI-driven services are accelerating the demand for cloud infrastructure across the technology industry. Ashkenazi noted that two-thirds of Google’s recent infrastructure investments were dedicated to servers, with the remaining one-third focused on data centers and networking equipment. She explained that the revised spending plan reflects the timing of server deliveries and an accelerated pace of data center construction to meet cloud customer needs. Despite improved efficiency in deploying servers, Ashkenazi cautioned that capital spending could rise further in 2026 as Google pursues additional growth opportunities. She did not specify these future plans but indicated more details would be shared in upcoming earnings calls. CEO Sundar Pichai has emphasized Google’s commitment to supporting AI innovation and expanding cloud capacity, citing the tight supply environment as a key reason for the increased investment. While the expanded infrastructure will support future growth, it will also result in higher expenses, potentially impacting short-term profitability. This move highlights Google’s strategy to stay ahead in the competitive cloud and AI markets by rapidly scaling its infrastructure to meet customer demand and position itself as a leader in AI-powered services.