$Alphabet(GOOGL)$ Google just raised its capital expenditure outlook by another $15 billion. That's the second guidance increase this year, after spending had already doubled from previous levels.
The reason seems pretty straightforward: demand for AI compute is outpacing available capacity. Sundar Pichai's message last quarter was clear when he said they were compute constrained.
With a $462 billion cloud backlog to fulfill, Google appears to be choosing aggressive spending over slowing down.
Some funds were reportedly reducing tech exposure heading into earnings. Google's response was to commit even more to AI infrastructure.
This capacity race is playing out across other major players too, like $Meta Platforms, Inc.(META)$ , $Microsoft(MSFT)$ , and AMZN.
The AI buildout doesn't look like it's cooling off. The budget just got bigger.
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