Alphabet reaffirmed its commitment to invest approximately $75 billion this year to expand its data center capacity, despite ongoing concerns over U.S. tariffs and market volatility.
The company also sought to reassure investors that its artificial intelligence (AI) initiatives were yielding significant returns.
With growing concerns about the capital costs of AI projects, especially amid uncertainties surrounding U.S. President Donald Trump’s trade tariffs, Alphabet’s CEO Sundar Pichai emphasized the company’s commitment to its AI strategy. Pichai highlighted that the investment would go toward purchasing chips and building servers to support Alphabet’s core services, including Search, while driving the development of AI capabilities like its Gemini model.
“The opportunity with AI is as big as it gets,” said Pichai, during an unexpected appearance at the company’s annual conference for its cloud computing unit.
Alphabet’s planned capital expenditure for this year, which was initially disclosed in February, marks a 29% increase over analysts’ expectations. The company is focused on bolstering its data infrastructure, even as U.S. tariffs potentially raise the cost of importing hardware.
Sachin Gupta, vice president and general manager for Google Cloud’s infrastructure unit, acknowledged that tariff-related costs might increase but emphasized that customer demand for data centers continues to drive the company’s investment plans. “We’re all processing what’s happening with tariffs,” he stated.
Despite these concerns, Alphabet’s shares rose nearly 10%, contributing to a $1.5 trillion increase in market value for major tech companies, often referred to as the “Magnificent Seven.”
Alphabet’s rivals are also ramping up their AI investments. Microsoft plans to spend more than $80 billion on AI infrastructure by 2025, while Meta Platforms has committed up to $65 billion for similar projects.
AI, along with cybersecurity, remains a primary focus for enterprises continuing to invest despite macroeconomic challenges, according to Chiraj Mehta, principal analyst at Constellation Research. “Early success from customers who have chosen Google Cloud as their preferred AI platform is reinforcing the case for continued aggressive investment,” he noted.
At Alphabet’s conference, customers such as Intuit, Papa John’s, and Verizon shared how AI is driving business innovation. Intuit’s chief data officer, Ashok Srivastava, confirmed that the company is “doubling down” on integrating AI into its financial services software.
Papa John’s chief digital officer, Kevin Vasconi, noted that the company has seen a higher return on AI-based projects than any other initiatives. Verizon highlighted that its use of a Google-powered AI assistant for customer service has improved efficiency, reducing call times and boosting sales.
