Alphabet plans to increase capital spending to $85 billion this year due to high demand for cloud services, beating Wall Street estimates for revenue and profit. Despite an 18% stock rise, shares initially dipped after the news. Google Cloud’s sales surged 32%, leading to further planned capital spending increases in 2026.

The rise of AI has boosted cloud computing demand, with Google Cloud focusing on AI offerings like TPU chips. Despite trailing Amazon AWS and Microsoft Azure, Google Cloud gained ground with a 28% increase in customers. OpenAI recently added Google Cloud as a supplier, marking a significant collaboration in the AI space.

Google’s AI features, like AI Overviews and AI Mode, have helped boost engagement and counter competition from chatbots. Google’s advertising revenue rose 10.4% to $71.34 billion, beating expectations. Alphabet reported total revenue of $96.43 billion and a profit of $2.31 per share for the quarter, exceeding analysts’ estimates.

Read more at Yahoo Finance: Google parent Alphabet surprises with capital spending boost after earnings beat