Alphabet’s 2026 forecast capex soars; Gemini 3 AI model is a huge success
Google parent company Alphabet forecast 2026 capital expenditures of $175 billion to $185 billion this year, a massive jump compared with average analyst expectations that it would spend about $115.26 billion this year, according to data compiled by LSEG. The midpoint capex forecast of $180 billion was well above the $119.5 billion projected by analysts tracked by Bloomberg. Alphabet’s fourth quarter capex of $27.9 billion was slightly less than the expected $28.2 billion for the period, per Bloomberg estimates.
“We’re seeing our AI investments and infrastructure drive revenue and growth across the board,” CEO Sundar Pichai said in the company’s press release. He said the higher 2026 spending would allow the company “to meet customer demand and capitalize on the growing opportunities.”
The release of Google’s Gemini 3 AI model — which outperformed competing models on benchmark tests and prompted rival OpenAI to declare a “code red” — as well as the announcement of a landmark deal with Apple, cemented Alphabet’s position as an AI winner. Google Gemini gained significant market share against ChatGPT. This changed the AI landscape from a near-monopoly to a more competitive duopoly. Although ChatGPT still leads in total traffic, Gemini’s growth has narrowed the gap. This growth is due to its integration into Google’s ecosystem.
“The launch of Gemini 3 was a major milestone and we have great momentum,” Pichai added. He noted that the Gemini app now has more than 750 million monthly active users.
Emarketer analyst Nate Elliott wrote:
“Gemini continues to grow quickly, from 650 million monthly active users at the end of Q3 to 750 million at the end of the year. But it’s worth noting that Gemini’s user number grew only about one-third as fast in Q4 as in Q3. That might explain why Google continues to keep its flagship AI tool advertising-free, hoping the lack of ads makes it more attractive to users than ChatGPT. It also explains why the company is now more aggressively pushing search users from AI Overviews into AI Mode: it’s looking for additional avenues to increase usage of its full-fledged AI chatbots.”
Google offices in Mountain View, Calif. (Reuters/Manuel Orbegozo) · Reuters / Reuters
Alphabet’s 4th quarter revenue climbed 18% to $113.8 billion from the year-ago period, ahead of the $111.4 billion expected by analysts. The tech giant’s earnings per share rose to $2.82 from $2.15 in the previous year, also higher than the $2.65 projected. The big increase in sales was spurred by a 48% spike in Google Cloud revenue to $17.7 billion, more than the $16.2 billion expected by analysts.
References:
https://s206.q4cdn.com/479360582/files/doc_financials/2025/q4/2025q4-alphabet-earnings-release.pdf
