Google Raises 2026 Capex Forecast to $195–205 Billion Amid Accelerated AI Data Center Expansion

Alphabet, the parent company of Google, has raised its full-year capital expenditure forecast for 2026 by $15 billion, signaling an aggressive push to expand its AI infrastructure and data center capacity. The company now expects to spend between $195 billion and $205 billion, up from the $180–190 billion range it projected in the previous quarter. This marks a significant acceleration from the $91.45 billion in capex recorded last year, which itself had nearly doubled from $52.5 billion the year before.

The announcement came during Alphabet’s second-quarter earnings call, where the company reported total revenue of $119.8 billion, a 24 percent increase from the prior quarter. Google Cloud emerged as a standout performer, posting $24.8 billion in revenue—an 82 percent year-over-year surge and a new record for the division. The growth reflects surging enterprise demand for cloud services and AI workloads, which continue to drive hyperscale data center buildouts across the globe.

“We have increased our capacity quite significantly over the past three years. The demand still outpaces that investment,” said CFO Anat Ashkenazi during the earnings call. She emphasized that the elevated spending is necessary to meet the unrelenting demand for compute power driven by AI model training and inference. Google also disclosed that it has begun recognizing revenue from standalone sales of its Tensor Processing Unit (TPU) chip family, marking a new revenue stream for its custom AI silicon.

Despite the strong top-line performance, Alphabet’s shares fell three percent in after-hours trading, reflecting investor unease over the mounting capital commitments tied to AI data center development. The market’s reaction underscores a growing tension between the revenue potential of AI services and the escalating costs of building the underlying infrastructure. Analysts note that while Google Cloud’s record results validate its AI investments, the scale of capex—now approaching a quarter of a trillion dollars annually—raises questions about near-term profitability and return on investment.

The increased spending aligns with broader industry trends, as hyperscalers like Microsoft and Amazon also ramp up their data center investments to secure a competitive edge in the AI era. Google’s expanded capacity is expected to support both internal AI products and external cloud customers, further entrenching its position in the rapidly evolving AI infrastructure market.