Alphabet Commits $811 Billion in AI-Related Capital Expenditures Through Long-Term Contracts
In its second-quarter report, Alphabet revealed it spent $45 billion on capital expenditures—double the amount from a year ago—and disclosed long-term commitments totaling an additional $811 billion. These investments are primarily focused on artificial intelligence infrastructure, including data centers and chip supply agreements. The company raised its 2026 capex budget to between $195 billion and $205 billion and expects significant increases in the following years. Alphabet's commitments include purchase obligations for chips, energy services, and construction of new facilities, with some contracts extending through 2054. The company anticipates fulfilling these agreements by 2030 but acknowledges that short-term cash flow will be negatively impacted due to rising costs in AI compute demand. Despite the financial strain on free cash flow—Alphabet reported negative figures for the first time since its IPO—the management remains confident, citing strong performance obligations and plans to expand TPU sales. The long-term strategy aims to secure supply chains and maintain competitive positioning as global demand for AI grows.
Topics: AI investment Alphabet capex free cash flow SEC filing