San Francisco, Feb 5, 2026, 07:24 (PST)
- Alphabet flagged up to $185 billion in 2026 capital spending, prompting a 3% share drop after earnings.
- CEO Sundar Pichai said the Gemini app topped 750 million monthly active users in the December quarter.
- Analysts warned Big Tech’s AI buildout is forcing investors to demand clearer payback.
Alphabet’s shares slid 3% after the Google parent said it could spend as much as $185 billion this year, a sharp step-up that put its AI spending spree back under a harsh light even as it posted brisk growth across key AI products. Reuters (Reuters)
The jump matters now because investors have started treating AI as less of a moonshot and more like a line item that has to earn its keep. Big tech firms are pouring cash into data centers and chips, and markets are showing less patience for vague promises. (Reuters)
Bernstein analyst Mark Shmulik put the scale bluntly: “We’re quickly getting to north of a trillion dollars” in combined 2026 investment across mega-cap firms when capital spending and related hiring are counted. He said for that kind of outlay to work, the “total addressable market” — the size of the potential customer pool — needs to grow fast. (Reuters)
Alphabet executives leaned into the payoff story on the post-earnings call, the first since the company released its Gemini 3 model. “Overall, we’re seeing our AI investments and infrastructure drive revenue and growth across the board,” CEO Sundar Pichai said. (Reuters)
Pichai said the Google Gemini app, which competes with OpenAI’s ChatGPT, ended the December quarter with more than 750 million monthly active users, up from 650 million in the prior quarter. He said engagement per user rose after Gemini 3 launched, and that the enterprise version of Gemini reached 8 million paying licenses. (Reuters)
The user race is messy to compare because companies cite different yardsticks. OpenAI CEO Sam Altman said in October that ChatGPT had more than 800 million weekly active users, Reuters reported. (Reuters)
Alphabet’s latest quarter also underscored how much of the cash machine still comes from ads, which helps bankroll the AI buildout. Alphabet’s fourth-quarter profit rose 30% from a year earlier to $34.5 billion, or $2.82 per share, while revenue climbed 18% to $113.8 billion, the Associated Press reported. Apnews (AP News)
Google Cloud revenue rose 48% to $17.7 billion, AP reported, while digital ad sales totaled $82.3 billion in the quarter, up 14%. Pichai told investors that “Search saw more usage than ever before, with AI continuing to drive an expansionary moment,” according to AP. (AP News)
The spending line is what startled people. Capital expenditure, or capex — money spent on long-lived items like data centers and servers — jumped to $91 billion last year, and Alphabet now expects $175 billion to $185 billion this year, AP reported. Financial Times also pointed to the same spending plan, framing it as Google moving to “double AI spending” after strong earnings. Ft (AP News)
Alphabet’s pitch is that the heavier spend is showing up in product traction and cloud sales, not just in slide decks. Still, the capex figure risks becoming the headline anyway because it potentially more than doubles from 2025 and would eclipse peers including Microsoft, Meta and Amazon, Reuters reported. (Reuters)
Investors have also been watching the other side of the AI boom: OpenAI’s rapid dealmaking and the financing strain that can come with it. Paul Meeks at Freedom Capital Markets called Alphabet’s capex forecast “eye-watering,” but said “the market is favoring Google versus OpenAI,” according to Reuters. (Reuters)
But the story can still turn. If AI-driven revenue does not rise fast enough, the bigger bill for chips, power and data centers could squeeze margins, and the company also faces legal uncertainty as the Justice Department and Google appeal a major U.S. antitrust ruling on its search business, AP reported. (AP News)
