Google doubles AI spending after achieving a historic milestone: surpassing $400 billion in annual revenue for the first time. This strategic shift comes amid robust financial performance across advertising, cloud services, and AI-integrated products.
Alphabet exceeds $400 billion in annual revenue
Alphabet, Google’s parent company, reported annual revenue above $400 billion for FY2025 — marking a record in the company’s history. Fourth-quarter revenue rose by 18% to approximately $113.8 billion, outperforming analyst expectations. Net profit also climbed 30%, reaching around $34.5 billion.
This growth was largely fuelled by a surge in advertising income and a 48% increase in revenue from its cloud division. Additionally, strong user engagement on platforms like YouTube and across AI services contributed significantly to Alphabet’s overall performance.
Google doubles AI spending to expand infrastructure
Following these results, Alphabet announced a sharp increase in capital expenditure. The company plans to allocate between $175 billion and $185 billion in 2026 — nearly double its previous investment.
A substantial portion of this budget is dedicated to artificial intelligence infrastructure, including next-generation data centres and proprietary hardware. These efforts are intended to support platforms such as Gemini, Google’s flagship AI solution, which has already attracted hundreds of millions of users.
CEO Sundar Pichai emphasised the growing demand for computing power and cloud capacity. He stated that these investments are crucial to enabling long-term product innovation and future growth.
Artificial intelligence at the heart of Google’s strategy
AI now sits at the core of Google’s product and business strategy. It is increasingly embedded across search functionality, cloud platforms, and user-facing services. This integration is strengthening Google’s competitive advantage in an evolving tech landscape.
Despite outperforming quarterly expectations, Alphabet’s announcement prompted mixed reactions in the market. Some investors expressed concerns about the scale of future spending. Nonetheless, the company remains committed to leveraging strong fundamentals to lead the next wave of AI-driven innovation.
