Alphabet borrows $100bn to pay for AI investments

Alphabet , the parent company of Google, has reported revenue for the second quarter of 2026 of £120bn, an increase of 24%, with Google Cloud experiencing “accelerated” growth. The Google Cloud Platform posted revenue of almost $25bn, an 82% increase from the previous year, driven by demand for artificial intelligence (AI). But the company’s capital expenditure (CapEx) during the quarter was $44.bn, with the vast majority of that being spent on technical infrastructure to support the company’s investments in AI. Of the $45.9bn in costs incurred during the quarter, it spent $18.2bn on research and development. CEO Sundar Pichai said: “One of the strongest parts of our growth comes from the rapid adoption of our Gemini Enterprise platform. It is differentiated with easy-to-use tools to build agents and automate processes, connectivity to enterprise systems, cost management and governance tools. “Gemini is transforming how millions of businesses use AI to build custom agents, automate processes, improve cyber security, manage customer relationships, streamline data analytics, collaborate effectively and more,” he said. “All of this momentum is driving growth in our paid token usage.” Chief financial officer Anat Ashkenazi said: “Approximately 60% of our investment in technical infrastructure this quarter was in servers, and 40% was in datacentres and networking equipment.” She said the company has revised its full-year 2026 CapEx guidance range to $195-205bn, up from its previous estimate of $180-190bn. “The increase in the range is primarily due to an acceleration in the delivery of capacity to meet growing demand,” said Ashkenazi. “As we previously shared, we continue to expect our CapEx to increase significantly in 2027.” She said the increase in spending would put pressure on Alphabet’s profit and loss account in the form of higher depreciation expense and related datacentre operations costs. When questioned about the rise in CapEx, Ashkenazi said: “We take a multi-year view at what the needs are, as well as focus on next year in the near term and build aggressively to meet those demands.” She said the company has also expanded its debt portfolio “quite significantly over the past 12 months”. This has grown from $16bn to $100bn. Along with running AI inference and machine learning workloads for its cloud customers, agentic AI is one of the areas the company has begun expanding into. Speaking about agentic AI in e-commerce, Philipp Schindler, chief business officer, used his prepared remarks during the earnings call to talk about agent-to-agent e-commerce. He said Alphabet has been running with a number of retailers, including Target, and described the open-source Universal Commerce Protocol (UCP) as “the new standard for agentic commerce”. “Merchants are rapidly adopting UCP,” said Schindler. “We also announced Universal Cart, allowing shoppers to add to items from different retailers across Google surfaces and buy in a single checkout.” Commenting on the Alphabet results, Forrester vice-president and research director Emily Collins said: “The results suggest Google is successfully using AI to deepen engagement while expanding its role across product discovery, shopping and commerce. As AI reshapes digital experiences, Google is positioning itself to monetise consumer intent across the entire customer journey.” Read more about AI investment AI inference cost optimisation : An enterprise guide: Inference is the largest long-term expense in enterprise AI deployments. Businesses can keep AI inference costs in check with these seven optimisation strategies. How the AI boom is reshaping tech cost management:FinOps practitioners are stepping up to manage AI expenses, optimise token usage and align cost-saving measures with sustainability goals to improve returns from AI investments.