Alphabet Boosts Capex to $180-$190 B, Driving Nvidia Chip Demand and Asian AI Growth
NVDA•Alphabet raised its capex guidance to $180-$190 billion with plans for even higher spending in 2027, boosting demand for Nvidia’s AI data center chips. Nvidia’s move into “physical AI” now drives approximately 90% of its production costs in Asia, prompting double-digit rallies among regional supply partners.
1. Alphabet Raises AI Infrastructure Spending
Alphabet increased its capital expenditure guidance to $180-$190 billion for AI infrastructure in 2026, with even larger budgets planned for 2027. This expanded investment is set to drive substantial orders for Nvidia’s GPUs and AI processors used in data centers worldwide.
2. Nvidia's Shift into Physical AI
Nvidia is expanding beyond traditional semiconductors into robotics, autonomous systems and AI-enabled manufacturing, a strategy it terms “physical AI.” This initiative represents the company’s next growth frontier by embedding its chips into real-world applications.
3. Asian Supply Chain Rally
Asian suppliers now account for about 90% of Nvidia’s production costs, up from roughly 65% last year. Key partners such as LG Electronics and Nanya Technology saw their shares jump in double digits following announcements of collaborations with Nvidia.
4. Market Implications and Profitability
Hyperscaler capex commitments from Amazon, Microsoft and Alphabet—totaling nearly $200 billion this year—underpin ongoing demand for Nvidia components. Continued adoption of physical AI and robust data center build-outs could further boost Nvidia’s revenue growth and market leadership.
