Sundar Pichai, chief executive officer of Alphabet Inc., during the Bloomberg Tech conference in San Francisco, California, US, on Wednesday, June 4, 2025.
Google parent Alphabet beat Wall Street's expectations for its fourth quarter but a new, high bar for expected spending on artificial intelligence infrastructure tempered enthusiasm.
Despite exceeding expectations on revenue, earnings per share and cloud, the Google parent's shares kept dipping in extended trading Wednesday, showing Wall Street remains sensitive toward AI spending.
Alphabet said it expects 2026 capital expenditures to be in the range of $175 billion to $185 billion. The top end of that forecast would be more than double its 2025 capex spend.
With the projection, Alphabet is resetting the year's expectations for how it'll spend in 2026 and testing its favor with Wall Street. The company said in October that it expected "a significant increase" to capex in 2026, but the projections shared Wednesday surpassed those of its hyperscaler peers.
In its quarterly report last week, Microsoft didn't provide a specific forecast for the year, but said capex will "decrease on a sequential basis" this quarter, after the company reported spending of $37.5 billion in the latest period. Meta said it expects to spend between $115 billion and $135 billion in 2026, which at the high end would be almost double last year's figure of $72.2 billion.
Amazon reports results on Thursday. Analysts expect the company's capex for 2025 to close at about $124.5 billion and for that figure to increase 18% this year to $146.6 billion, according to FactSet.
Alphabet's spend increase comes at a time when Wall Street has been particularly sensitive to extra AI spend.
Despite positive tech earnings, the software sector as a whole has lost 30% of its value in the last three months, CNBC's Michael Santoli said. That's due to concerns that AI tools will upend existing software tools and make higher spending riskier. Up until this point, Alphabet has been largely spared from any major stock moves, especially after it was one of the top performers of 2025.
But while Wall Street balks at the bountiful spending, tech companies are racing to build more infrastructure to keep up with customer demand for AI services.
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