Google’s parent Alphabet beat Wall Street’s expectations for its fourth quarter, however, the company also set a new, high bar on artificial intelligence infrastructure, tempering enthusiasm.
Alphabet’s shares kept dipping in extended trading Wednesday, despite exceeding expectations on revenue, signaling that Wall Street remains sensitive to AI spending.
Google had subverted expectations by showing impressive artificial growth, offering competition with OpenAI. Alphabet said it expects 2026 capital expenditures to be in the range of $175 billion to $185 billion. The top end of that forecast would be more than double its 2025 capex spend.
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Alphabet CFO Anat Ashkenazi said on a call with analysts that the higher 2026 spending would go toward AI computing infrastructure as the company looks to develop frontier AI models and meet demand for its Cloud and Services segments.
“The investments that we’ve made in AI — it’s already delivering results across the business,” said Ashkenazi. The executive pointed to growth in Google Cloud driven by demand for its AI products. The segment saw fourth quarter revenue spike 48% from the previous year to $17.7 billion, more than the $16.2 billion expected by analysts.
Ashkenazi said Alphabet will make its 2026 investments “in a way that maintains a very healthy financial position for the organization.”
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The projection for 2026 resets Alphabet’s expectations for how it will spend this year, and tests its favor with Wall Street. The company said in October 2025 that it expected “a significant increase” to capex in 2026, but the projections shared Wednesday surpassed those of its hyperscaler peers.
While Microsoft didn’t provide a specific forecast for the year in its quarterly report last week, the company said capex will “decrease on a sequential basis” this quarter, after the company reported spending of $37.5 billion in the latest period. Meta said it expects to spend between $115 billion and $135 billion in 2026, which at the high end would be almost double last year’s figure of $72.2 billion.
Alphabet stock had risen by more than 20% ever since its last earnings report showed the company beginning to benefit from a bunch of AI deals with Meta, Anthropic, and OpenAI involving its Cloud segment. This comes as the broader “Magnificent Seven” group of Big Tech stocks has been collectively down nearly 5% over that period, led by a 23% drop in Microsoft shares.