It’s no secret that Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is spending big in the artificial intelligence (AI) arms race.
At the start of the year, it told investors it would spend from $175 billion to $185 billion on capital expenditures in 2026, primarily on data center construction
Since then, management has bumped that range to $180 billion to $190 billion. Those are mind-boggling figures, and the knee-jerk reaction among investors may be that the company is spending far too much. However, I think that’s the wrong way to look at it.
There’s one metric I’ve got my eye on that shows that this spending is logical, and indicates that the return on investment could make it all worth it. Google Cloud’s growth is exploding The data centers that Google is constructing are being used for two primary purposes. The first is for Alphabet’s internal needs, but that’s not nearly as large as the cloud computing opportunity.