(Bloomberg) – Alphabet Inc. said that the demand for artificial intelligence products has increased quarterly sales and now requires an extreme increase in capital expenses – increased pressure on the company to justify the cost of maintenance in the IA race.
Most of Bloomberg
Google’s mother company said capital expenses of 2025 will be $ 85 billion, or $ 10 billion higher than a previous forecast. Although Alphabet has beat expectations for the revenues and profits of the second quarter, its actions initially flowed into exchanges after opening hours, then rebounded after the chief executive department Sundar Pichai explained that investments are necessary to meet the needs of customers. “Our investments in AI infrastructure are crucial to responding to the growth in Client Clients’ demand,” he said on Wednesday after the report.
While Microsoft Corp., Startup Openai, Meta Platforms Inc. and others continue to pay money into AI, Alphabet has no choice but to follow the step, analysts said. The race is particularly urgent for Google: competitors build chatbots which could possibly please consumers more than its flagship research product. “Google’s hand is forced by OpenAI to spend a lot on infrastructure and AI applications,” said Nikhil Lai, analyst at Forrester.
Alphabet shares increased up to 2.8% in exchanges prior to marketing on Thursday. They had closed 0.6% down $ 190.23 in New York in New York on Wednesday and won around 10% in the past 12 months.
The recent quarter was solid almost at all levels for alphabet. Sales, excluding partners’ payments, climbed $ 81.7 billion, said Alphabet in a statement, exceeding analysts of $ 79.6 billion on average, according to data compiled by Bloomberg.
Alphabet is counting on its basic research advertising mastodon and its growing cloud computing activity to support its spiral expenses on AI. Employees are under pressure to put AI products on the market faster, new methods of research for tools for cloud customers. “We see an important request for our full portfolio of AI products,” said Pichai.
Financial director Anat Ashkenazi said capital expenses will increase again next year, without providing details.
AI racing tension could be identified elsewhere in the results of the company. Ashkenazi awarded the leap of 16% of the company in research and development spending on the increase in remuneration packages for key employees. Meta has made unprecedented remuneration offers as she seeks to court researchers for her superintendent laboratory, which increases the price of key industry employees.
Earlier this month, Google concluded an agreement to pay around 2.4 billion dollars for the best talents and the license rights of artificial coding of the startup. However, money is not the only consideration for researchers when he decides where to work, said Pichai.
The best talents in the field want to “be really in the progression of the border”, in addition to having access to computer power and talented peers, said Pichai. “It is a combination of all this and use it to generate an impact. And I think we are quite competitive on all these fronts. ”
The Google Cloud composition unit declared a quarterly turnover of $ 13.6 billion and an operating profit of $ 2.83 billion, exceeding analyst projections. Google remains in third place in this market, after Microsoft and Amazon.com Inc., but the prowess of the company in AI have helped to mark the customer. The unit is largely considered to be the strongest source of alphabet growth as the main research activity matures.
The centerpiece of the cloud offensive is Gemini, the IA model that Google quickly weaves in its large product portfolio and pushes to corporate customers. Many AI experts have been impressed by the release of a new version of the Gemini model earlier this year, but it still follows the Openai Chatppt in adoption by most estimates.
While Google faces an assembly competition, it is also faced with penalties to be dominant. Google’s main companies are threatened with a break after American federal judges have ruled that the company maintained illegal monopolies in research and advertising technology. Next month, Judge Amit Mehta is expected to make an order on the measures that Google has to restore competition in online research, although Google said it was planning to appeal the decision.
YouTube, Google’s video site, posted $ 9.8 billion in advertising revenue in the second quarter, exceeding analysts of $ 9.56 billion. The unit, which derives most of its advertising income, had to perform well thanks to its advance in living room streaming and heavy investments in podcasts.
The other alphabet bets, a collection of futuristic companies that includes the effort of a Waymo autonomous car, generated $ 373 million in income, lacking estimates for $ 429.1 million. Ashkenazi said Alphabet will continue to devote more resources to Waymo.
ALPHABET has aggressively widen Waymo operations, which could soon face increased competition as Tesla increases its Robotaxi activities. Earlier this month, Waymo has more than doubled its service area in Austin, Tesla Inc.’s attachment base, and said it would start collecting data in New York in pursuing a permit for tests.
“The team is testing in more than 10 cities this year, including New York and Philadelphia,” said Pichai. “We hope to serve the runners in the 10 in the future.”
Google is not the only one to feel the pressure to show the success of the IA investment. Shortly after Waymo de Pichai comments, on the call of the results of Tesla, the chief executive, Elon Musk, began to slam the prowess of the AI of Google. He said Tesla was “actually much better than Google”. Investors can disagree; Tesla’s actions have dropped.
(Updates with a pre-market sharing movement in the fourth paragraph)
Most of Bloomberg Businessweek
© 2025 Bloomberg LP
