Alphabet accelerates its AI push with record $185bn investment to dominate the digital future

Alphabet, Google’s parent company, has exceeded fourth-quarter revenue expectations and unveiled an unprecedented capital expenditure plan, with spending set to reach up to $185bn in 2025 - well above the $119.5bn forecast by analysts. The figure alone would surpass the group’s total investments over the previous three years combined.

In the fourth quarter, revenues excluding traffic acquisition costs reached $97.23bn, compared with a consensus estimate of $95.2bn. Growth was driven primarily by Google Cloud, which posted a 48 per cent increase to $17.7bn, benefiting from strong demand for enterprise artificial intelligence solutions.

At the heart of the strategy is Gemini, the company’s proprietary AI model, now integrated across its core products, from search to the Chrome browser. The Gemini app reached 750m active users by December, while Gemini Enterprise has already attracted more than 8m paying customers just months after launch. Cloud backlog - a key indicator of future demand - more than doubled year on year to $240bn.

Investment will be focused on data centres, servers and networking infrastructure, aimed at supporting both model development and cloud customers. The market, however, remains divided. Despite Alphabet shares gaining 61 per cent over the past year, the stock showed sharp volatility following the earnings release, reflecting concerns over the scale of the spending.

Andrea Pelucchi