Brent crude spiked roughly 27% last week to near $120 per barrel, raising electricity costs for Google’s hyperscale data centers. Each cent increase per kilowatt-hour can shave points off Google Cloud’s profitability as capex for Gemini and other AI builds climbs.

Global spending on AI server memory is forecast to jump to $650 billion in 2026, straining supply as only three firms control high-bandwidth memory production. Production complexities in HBM stacking and channel etching mean capacity additions may lag demand, risking delays and higher module prices.

Google shares fell over 1% during a broader tech sell-off, underperforming peers that saw outsized rallies on defense spending or AI chip hopes. Investors may have to re-rate Alphabet shares based on a structurally higher cost base that could erode earnings leverage despite top-line AI growth.