Alphabet Plans $175–180 Billion AI Capex as Google Cloud Surges 48%
Alphabet’s revenue rose 15% year-over-year to $403 billion in 2025, driven by a 48% surge in Google Cloud, while the company plans $175 billion–$180 billion in capital expenditures for AI infrastructure in 2026. Analysts project 12.7% annual EPS growth through 2028, but concerns surface over AI-driven deflation risks.
1. Robust Revenue and Cloud Growth
Alphabet reported a 15% year-over-year revenue increase to $403 billion in 2025, led by Google Cloud’s 48% surge, underscoring the business’s expanding enterprise services.
2. Major Capital Expenditure Plans
The company has earmarked $175 billion to $180 billion in capital expenditures for 2026, primarily to develop and expand AI infrastructure, driving potential long-term productivity and margin improvements.
3. Positive Earnings Forecasts and Valuation
Analysts project 12.7% annual EPS growth through 2028, reflecting confidence in sustained profitability, while the shares trade at a P/E ratio near 28.5, indicating moderate valuation relative to growth prospects.
4. AI-Driven Deflation Concerns
Analysts caution that prolonged AI-driven deflation could erode pricing power and revenue growth, highlighting the need to monitor demand trends and the broader macroeconomic impact of widespread AI adoption.