Alphabet raises capex forecast to $205B after cloud surges 82%

Alphabet ↗ 1.53% boosted its full-year 2026 capital expenditure guidance on Wednesday after reporting second-quarter results that showed Google Cloud growing far faster than Wall Street expected. CFO Anat Ashkenazi announced the increased spending outlook during the company's earnings call, raising the range to $195 billion to $205 billion from a prior forecast of $180 billion to $190 billion, as the company presses deeper into the AI infrastructure race.

The move marks the third time this year Alphabet has lifted its capex target. In February, the company initially guided for $175 billion to $185 billion, then raised it to $180 billion to $190 billion alongside first-quarter results in April. The latest increase reflects both the pace of actual spending — $44.9 billion in Q2 alone, more than double a year earlier — and surging demand for AI compute.CNBC+2

Cloud Growth Accelerates

Google Cloud posted revenue of $24.8 billion in the quarter, up 82% year over year and well ahead of analysts' estimates for roughly 70% growth. The acceleration from 63% growth in Q1 made it the fastest expansion since Alphabet began reporting the segment separately. Cloud operating income more than tripled to $8.8 billion from $2.8 billion a year ago.9To5Google+2

CEO Sundar Pichai said nearly 90% of the Fortune 100 are now using Gemini Enterprise and that the Gemini App has reached 950 million monthly active users. He attributed the growth to demand for enterprise AI solutions, AI infrastructure, and the company's custom TPU chips.blog+1

The Broader Spending Race

Alphabet's revised outlook comes as Big Tech collectively accelerates AI infrastructure investment. According to Bloomberg, the largest U.S. technology firms planned to spend as much as $725 billion on capital expenditures in 2026 as of April. Morgan Stanley ↗ 0.81% now projects combined capex from Alphabet, Amazon Amazon.com, Inc. ↗ 1.94%, Meta ↗ 0.57%, Microsoft ↗ 0.65%, and Oracle ↘ 1.74% will reach approximately $805 billion this year and $1.1 trillion in 2027.Bloomberg+2

Total Q2 revenue reached $119.8 billion, up 24% and near the top of analyst estimates. Operating income rose 30% to $40.8 billion. Reported net income of $112.1 billion was inflated by a $98 billion gain on equity investments, a paper gain that analysts had not factored into expectations.AIStockWire+2

Funding the Buildout

The scale of spending has forced Alphabet to tap capital markets aggressively. During the quarter, the company raised $49.6 billion through new stock and mandatory convertible preferred shares earmarked for AI infrastructure, plus $20.3 billion in senior unsecured notes. Alphabet spent $80.6 billion on capital expenditures in the first half of 2026 alone, compared with $39.6 billion in the same period a year earlier.AIStockWire

Shares ticked higher in after-hours trading following the release, though the stock had slipped during the regular session amid a broader pullback in technology names.AIStockWire