Google justifies its massive AI spending with a booming

What happened

Alphabet investors have very publicly worried that the company’s massive AI spending isn’t worth the money. With the company’s latest earnings report, those investors should be able to relax a little. The takeaway: Google’s cloud business — driven largely by enterprise AI adoption — is booming. 8 billion. 46 billion).

This marks the company’s 12th consecutive quarter of double-digit revenue growth. But even by that standard, this quarter represents a particularly bountiful period for the tech giant.

“We are seeing strong demand indicators, including long-term deals,” he continued. “I think, if anything, the dynamics look healthier than where we were about a year ago, so that’s what gives us the confidence to undertake those investments,” he said. When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.

Why it matters

Those cloud gains were driven largely by enterprise AI solutions and enterprise AI infrastructure adoption, the company said, while also noting that its backlog of cloud contracting work — that is, work that it hasn’t yet converted into revenue — had climbed to $514 billion. 1 billion in profit, the company’s earnings report shows. 8 billion. 5 billion.

“Our AI investments are redefining what’s possible across every part of our business,” said Google CEO Sundar Pichai during Wednesday’s earnings call. ” More people are also adopting Gemini, Google’s AI chatbot, as the app currently enjoys 950 million monthly active users, the company said. In Q4 of 2025, Google reported that the app had 750 million users. It’s worth noting that spiking revenue isn’t unusual for Google.

What to watch

Alphabet’s spending is still hefty, with its capital expenditures — the money it spends building data centers, buying chips, and expanding infrastructure — estimated to be between $180 billion and $190 billion for the year — a fact not lost on analysts during Wednesday’s earnings call. Several pressed Pichai on when, and how much, those investments will pay off. “I think our compute capacity investments in ’27,” he said.