Yahoo Finance·2026-02-05 01:45Core Insights - The surge in capital expenditures (capex) is driving record-high tech valuations, with investors reacting positively when they believe the spending is justified [1] - Alphabet plans to significantly increase its capex to between $175 billion and $185 billion in 2026, a substantial rise from $91.4 billion in 2025 and $52.5 billion in 2024 [2] - The competitive landscape in AI is prompting major players, including Alphabet, to invest heavily in innovation and infrastructure [3] Company-Specific Insights - Alphabet's Q4 capex investment reached $27.9 billion, reflecting its commitment to maintaining a competitive edge in AI [2] - CEO Sundar Pichai expressed concerns about the challenges associated with the rapid increase in capex, including the time required to convert investments into operational data centers and address power and supply chain constraints [4][5] - Despite the significant increase in spending, Pichai acknowledged ongoing supply constraints that will impact the company's AI and cloud services [5][6] Industry Trends - The tech industry is experiencing a fierce competition in AI, with companies like Meta also announcing substantial increases in capex, indicating a broader trend of escalating investments in AI infrastructure [3][6] - The relentless pace of innovation in AI is driving companies to continuously adapt and invest, highlighting the dynamic nature of the industry [3]