Alphabet Inc, the parent company of Google, announced a staggering 2026 capital expenditure of $175 billion to $185 billion. This is double what it spent in the last year. Although this level of spending adds risks for Alphabet, Nvidia has some great news. The dominant maker of data-center GPUs to run AI applications is expected to make a big win from this move by Alphabet.
Investors’ Caution Over Rising AI Capital Spending
Alphabet, in its fourth-quarter earnings report on Wednesday, delivered solid results. However, the doubling of stock in the last six months wasn’t enough to keep the rally going, especially as the AI trade has come under scrutiny in recent weeks. Alphabet beat estimates on the top and bottom lines, but investors were wary about its aggressive capital expenditure plans in 2026 to fuel its AI ambitions.
Alphabet management touted the return from the investments that had already been made in AI. It plans to step up investing in AI computing to provide support for the frontier model development by Google DeepMind, meaning cutting-edge AI that likely requires the Nvidia hardware in addition to the improvements in the core businesses like advertising. The management also called out Nvidia as its key partner and said that it would be among the first to receive access to Nvidia’s new Vera Rubin GPU platform.
Record Spending Drives Revenue
Big tech companies like Alphabet, challenging Nvidia with its Tensor Processing Units (TPUs), can be a reminder that the hyperscalers like Amazon, Microsoft, Meta Platforms, including Alphabet, are still largely dependent on Nvidia hardware.
Sundar Pichai, the CEO of Alphabet, gave a full-throated defense of the AI boom, saying that it had sold 8 million paid seats for Gemini Enterprise just four months after its launch. Additionally, he also defended the record spending, stating that the AI investments and infrastructure are already driving revenue and growth “across the board”, making them capable of meeting the demands of the customer and the cap on the growing opportunities in the near future. Alphabet’s latest AI model, Gemini 3, is reported to have gained 750 million monthly active users, driving the requirement for more compute power.
How the Capex Doubling Matters to Nvidia
In the previous week, Meta Platforms announced that it is planning to nearly double its capital expenditure this year, and Alphabet is also repeating the same. At a time when software stocks are plunging on fears of disruption from AI, bringing down chip stocks like Nvidia, this doubling of capital expenditure is actually pointing out that the AI boom is not only alive but also accelerating. It bodes well for the continued growth and development of Nvidia. NVIDIA’s previous-generation high-performance chip is still seeing ‘sold out’ demand. Thus concluding that although tech stocks fear AI, they also benefit from it. The Wall Street consensus for Nvidia’s fiscal 2027, which began recently, is for Nvidia’s revenue to jump 52%. Based on the capex forecast from Alphabet and Meta, there is nothing to be surprised if the AI chip leader beats the estimation.
