Race of the AI Developers High AI Investments at Google Parent Company Alphabet

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In the battle for AI supremacy, Alphabet announces investments of over 150 billion US dollars, including for its data centers. The money comes primarily from the profitable advertising business.

In the race of AI developers, Google's parent company Alphabet is drastically increasing its billion-dollar investments. The internet giant has announced capital expenditure of between 175 and 185 billion dollars (148 to 156.6 billion euros) for the current year. The money is likely to flow into data centers for artificial intelligence, among other things. Alphabet invested a good 91 billion dollars last year. Google is competing in the AI field with chat GPT inventor Open AI and Facebook group Meta, among others. Google has its AI software Gemini competing against Chat-GPT and Co. The Gemini app alone recently reached 750 million users per month, but the technology is also used in Google's search engine.

Most recently, Apple also opted for the AI models behind Gemini as the basis for a more useful version of its voice assistant Siri. Google and Alphabet boss Sundar Pichai said in a conference call with analysts that Apple had chosen the company as its preferred cloud provider.

What Keeps the Google Boss Awake at Night

Google is also eclipsing Meta with its spending plans. The Facebook group recently forecast capital investments of between 115 and 135 billion dollars for this year. At the same time, Google bosses are worried that they might not be fast enough even with this huge expenditure. One of the analysts asked what was keeping the company bosses awake at night. It is "definitely computer capacity" with all kinds of bottlenecks, such as energy, available space and components, said Pichai. For example, the demand for memory chips for AI data centers is currently devouring a large part of global production capacity. As a result, prices are rising.

Google's investment forecast led to share price gains for chip providers, where a large proportion of the spending is likely to end up. Shares in Nvidia, the leader in AI semiconductors, rose by almost two percent at times in after-hours trading, while chip provider Broadcom rose by more than six percent. Alphabet shares initially fell significantly. However, they were able to limit the decline to two and a half percent.

Google's Advertising Business Remains Strong in the AI Era

The money for the rapid expansion continues to come primarily from Google's advertising business, which is running at full speed. In the final quarter of 2025, it grew by around 13.5% year-on-year to 82.3 billion dollars. Overall, Group revenue increased by 18 percent to 113.8 billion dollars. On the bottom line, Alphabet posted a consolidated profit of almost 34.5 billion dollars—almost 30 percent more than a year earlier.

The development of Google's advertising business is being monitored very closely. This is because Google is introducing more AI-generated summaries into the search engine that can answer users' queries directly—even if they are sometimes incorrect or inaccurate, which many users do not notice due to a lack of verification. This reduces the incentive to click on links to original sources next to the search results. This is how Google has traditionally made the most money. Pichai now said that AI answers in search results increased usage. In AI mode, many people asked more questions in the search engine. Once people started accessing AI search results, they used the function more.

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