Robert Castellano, a technology analyst with over 40 years of experience, noted that Alphabet's previous capital expenditure (Capex) guidance for 2026 of $180–190 billion was overly conservative and expects the company to raise it to $190–200 billion in this earnings report. Deutsche Bank also significantly revised its forecast upward, now projecting Capex of $325 billion for 2027 (previously $250 billion) and $365–370 billion for 2028.
$Alphabet-C (GOOG.US)$ Parent company Alphabet will release its second-quarter earnings after the U.S. market close on July 22 local time (early morning of July 23 Beijing time), but the market’s primary focus is not on the quarterly profit performance; rather, it is on whether management will further raise its capital expenditure (Capex) guidance for AI.
Robert Castellano, President of The Information Network with over 40 years of experience in technology industry research, wrote that multiple signals across the supply chain suggest Alphabet’s previously stated Capex forecast of $180–190 billion for 2026 may already be conservative. With AI data center construction accelerating and cloud computing demand remaining robust, Alphabet’s AI infrastructure investment is likely to continue trending upward over the coming years.
Castellano expects Alphabet may raise its 2026 capital expenditure guidance to $190–200 billion in its upcoming earnings report, while maintaining its previous statement that spending in 2027 could approach $300 billion.
Meanwhile, Deutsche Bank has also significantly raised its forecast for Alphabet’s future capital expenditures. According to a prior article from Wall Street News, Deutsche Bank now projects Alphabet’s 2027 Capex to reach approximately $325 billion, a notable increase from its earlier estimate of $250 billion; capital spending in 2028 could further rise to $365–370 billion.
If this trend materializes, it would indicate that the AI infrastructure investment cycle continues to expand, potentially prompting markets to reassess earlier concerns that AI-related capital spending is nearing a peak and losing momentum.
AI Arms Race Heats Up: Capital Expenditures by Five Tech Giants Could Exceed $770 Billion in 2026
The wave of AI infrastructure investment is entering a phase of even larger-scale expansion, and Alphabet’s capital expenditure trajectory now carries market implications far beyond a single quarter’s earnings report.
As hyperscale cloud providers continue to ramp up investments in data centers, computing power, and energy infrastructure, capital outlays are shifting from incremental growth to a long-term race measured in hundreds of billions of dollars.
Market data shows that combined capital expenditures by Alphabet, Amazon, Microsoft, Meta, and Oracle have surged from $271 billion over the 12 months ending April 2025 to $482 billion over the 12 months ending April 2026. Based on current company guidance and market expectations, total capital spending by these five tech giants in 2026 is projected to reach $745–775 billion, representing an increase of approximately 55% to 61% compared to the prior period.
This figure not only reflects the tech giants’ strong bets on the commercialization prospects of AI but also underscores their role as the central drivers of demand growth across the entire semiconductor supply chain.
Five tech giants dominate the AI infrastructure investment cycle
It should be noted that the capital expenditures exceeding USD 770 billion will not all flow directly to chip suppliers. They also encompass servers, networking equipment, data center construction, land acquisition, power infrastructure, and energy supply systems.
However, from a supply chain perspective, each newly added AI data center drives synchronized expansion across multiple segments—from high-performance computing chips and HBM memory to advanced packaging, wafer fabrication, testing equipment, and high-speed interconnect networks—creating a comprehensive supply chain pull effect driven by AI infrastructure investment.
The market’s core focus lies in the fact that current demand along the AI supply chain is not driven by a single company but collectively determined by a small number of hyperscale cloud providers. Their procurement cadence for GPUs, custom ASICs, HBM, optical networking, and data center power systems has become a key indicator for gauging the semiconductor industry’s cyclical strength.
Therefore, whether Alphabet further raises its capital expenditure guidance reflects not only an assessment of the outlook for its Gemini model and Google Cloud business but also serves as validation of the intensity of AI infrastructure demand in the next phase.
Meta leases out excess capacity; Google’s orders provide a floor—two distinct paths for AI capital spending
Recently, Meta’s consideration of selling a portion of its AI infrastructure capacity to external clients has sparked market debate over potential oversupply in AI investments. However, from an industrial logic standpoint, this move appears more aimed at improving asset utilization rather than cutting back on investment.
According to Wells Fargo & Co.’s revised forecast, Meta’s push to externalize part of its AI infrastructure capacity primarily stems from a timing mismatch in the release of internal inference demand. By leasing capacity externally, Meta aims to realize returns on its invested compute resources earlier. This indicates Meta is commercializing its already-deployed computing power rather than being forced to absorb excess capacity due to insufficient demand.
In contrast, Alphabet possesses stronger internal absorption capacity. Google Cloud currently holds a backlog of contracts amounting to USD 462 billion, reflecting robust enterprise demand for AI computing power and cloud services that provides solid order support. This means Alphabet’s new capital investments can be more directly linked to future revenue growth, resulting in higher commercial certainty for its capital expenditure expansion.
Alphabet’s earnings report has become a critical observation window for the AI investment cycle
For the market, the key aspect of Alphabet's second-quarter earnings report released on July 22 is not merely its profitability and revenue performance, but whether management further raises its capital expenditure outlook for AI.
If Alphabet revises upward its capital expenditure guidance for 2026, it would reinforce the market’s view on the sustainability of the AI infrastructure investment cycle and provide renewed fundamental support for the semiconductor, memory, advanced packaging, and data center supply chains.
Conversely, if capital expenditures fall short of expectations, the market may reassess the AI investment return timeline and exert near-term downward pressure on valuations of related technology stocks.
As hyperscale data center giants such as $Microsoft (MSFT.US)$ 、 $Meta Platforms (META.US)$ and $Amazon (AMZN.US)$ Following the upcoming earnings releases, Wall Street will closely monitor whether the AI infrastructure race continues to accelerate and whether the hundreds of billions of dollars in capital investment can consistently translate into revenue growth.
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Editor/KOKO