Google expects 'significant increase' in capital expenditure in 2026, execs say

Core Insights - Alphabet Inc. plans a significant increase in capital expenditures for 2025, expecting it to be between $91 billion and $93 billion, driven by growth in cloud services and AI infrastructure investments [2][3] - The company reported its first $100 billion revenue quarter, exceeding Wall Street expectations, and noted a 46% quarter-over-quarter growth in cloud service backlog [2][5] Group 1: Capital Expenditures - Alphabet has increased its capital expenditure expectations twice this year, initially from $75 billion to $85 billion, primarily for new data centers [3] - Executives anticipate further increases in capital expenditures for 2026, with more details to be provided in the fourth quarter earnings call [3] Group 2: Cloud Services Growth - Google Cloud's backlog reached $155 billion, with a 32% year-over-year revenue growth, indicating strong demand for cloud services [5] - The company has secured more $1 billion deals in the last nine months than in the previous two years combined, highlighting its competitive position in the cloud market [5] Group 3: AI Developments - Google's AI app Gemini has grown to over 650 million monthly active users, up from 450 million the previous quarter, showcasing the increasing adoption of its AI products [7] - AI Mode within Google's search engine has 75 million daily active users in the U.S., with search queries doubling in the third quarter, indicating strong engagement with AI features [8] Group 4: Competitive Landscape - Other tech companies, such as Meta, are also increasing their capital expenditure forecasts, reflecting a broader industry trend to enhance infrastructure for AI services [4] - Google secured a $10 billion cloud contract from Meta and a significant deal with Anthropic for access to custom-designed Tensor Processing Units, further solidifying its position in the AI and cloud markets [6]