The AI spending of Alphabet will far exceed investor expectations.

Alphabet Inc. announced that its fourth quarter revenue exceeded expectations, and the company stated that its spending plan for 2026 will be significantly higher than investor expectations. The Google parent company said it will spend between $175 billion and $185 billion this year, while analysts had previously expected $119.5 billion. The company's fourth quarter sales, excluding partner revenues, were $97.23 billion, higher than the Bloomberg consensus analyst average of $95.2 billion. Google is accelerating the reshaping of its business to adapt to the era of artificial intelligence, striving to maintain users' habits of using its search page even as they may turn to competitors like OpenAI for chatbots. These efforts are paying off. However, in order to justify such high spending, Alphabet still needs to show momentum in its cloud computing and search advertising businesses. The company has said that its massive investments in artificial intelligence including new infrastructure, research and talent are crucial to competing with rivals like Amazon, Microsoft, and OpenAI.