Alphabet prepares to significantly increase AI spending next year — Fortune
Alphabet, Google’s parent company, expects a significant increase in capital expenditures on artificial intelligence development next year. Alphabet President and Chief Investment Officer Ruth Porat said this at the Fortune Most Powerful Women summit in Santa Barbara, California, United States. In 2026, the company is spending about $200 billion to expand its AI capacity.
According to Porat, Alphabet remains constrained by available computing capacity amid growing demand from businesses, government entities, and on its platforms. She noted that the company is in a phase of actively expanding infrastructure and that such investments are intended for the long term.
Spending and financial results
In July, Alphabet raised its 2026 capital expenditure forecast to $205 billion. The day after that, the company’s shares lost more than 6%, which Fortune links to investors’ expectations of evidence that such spending will pay off.
More current news is available on the UA.News Telegram channel Telegram.
In the second quarter, Alphabet’s capital expenditures amounted to $44.9 billion, with most of the funds directed toward technical infrastructure for AI. The company’s free cash flow turned negative, reaching minus $5.9 billion, for the first time in more than 20 years of being publicly traded. At the same time, Google Cloud revenue increased by 82% to $24.8 billion, while the division’s operating profit more than tripled to $8.8 billion.
Arguments over AI returns
Porat disagreed with the assessment by Jefferies’ global head of equity strategy, Chris Wood, who suggested that the AI boom in the United States could end in significant capital destruction because of competition from cheaper Chinese open-source models. In her view, strong demand for computing resources and tools for businesses and government institutions indicates the possibility of generating returns from such investments.
According to Porat, companies need to create value for partners while efficiently providing computing capacity in order to achieve attractive profitability. She also acknowledged communities’ concerns about data center construction: according to a Gallup survey she cited, about 71% of Americans do not want to see such a facility in their community. Alphabet is investing in nuclear, geothermal, solar, and wind energy, and is also involved in training electricians, welders, and other specialists for infrastructure development.
