[News] Google Reportedly to Nearly Double 2026 CapEx as Cloud Revenue Jumps Nearly 48%

Google is increasing spending in the AI race. According to Reuters, Google parent Alphabet said that capital expenditure could nearly double this year. Alphabet executives said investments in AI computing capacity—covering servers, data centers, and networking equipment—are central to plans to target capital spending of $175 billion to $185 billion this year, up from $91.45 billion in 2025.

The capital expenditure target also exceeds analysts’ expectations. Analysts had forecast average spending of about $115.26 billion this year, according to data compiled by LSEG, the report notes.

Google Cloud Growth Meets Capacity Constraints

As noted by Reuters, the company’s cloud segment posted standout growth in the fourth quarter ended December, with revenue surging 48% to $17.7 billion, beating analyst expectations. The report adds that this was the segment’s fastest growth rate in more than four years.

That performance is particularly notable, as analysts cited by Reuters said it was the first time in several years that Google Cloud’s growth outpaced Microsoft Azure, helping support Alphabet’s decision to step up capital spending. Analysts cited by Bloomberg further note that Alphabet’s broader TPU and cloud strategy enhances its differentiation and positions the company well over the next few years.

Demand momentum is also reflected in the company’s backlog, which rose 55% sequentially and more than doubled year over year to $240 billion by the end of the fourth quarter, CNBC reports. Still, Alphabet CEO Sundar Pichai said the company has been supply constrained despite ongoing capacity expansions, Reuters notes, adding that this year’s capital spending is aimed at the long term as capacity constraints are expected to persist through the year.

(Credit: Google)

Gemini Traction Boosts Google’s AI Standing

The Gemini app is also gaining traction among users. According to CNBC, Pichai said that the Gemini AI app now has more than 750 million monthly active users, up from 650 million in the previous quarter.

Pichai added that the company is working to make the model more efficient. CNBC notes that Gemini’s serving unit costs were reduced by 78% in 2025 through model optimizations and improvements in efficiency and utilization.

That momentum is also reflected in market reactions to Google’s latest model releases. Reuters notes that the launch of Google’s Gemini 3 AI model in November helped reset perceptions around the company’s AI capabilities. The strong reception strengthened Google’s position in the AI race and prompted rival OpenAI to issue an internal “code red” to accelerate development efforts.

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