Brief

Alphabet plans to boost AI spending beyond $200 billion in 2026, says Ruth Porat

Porat told Fortune the AI build‑out will grow next year despite capacity constraints and market competition.

By Felo News Desk · Published Tue, 13 Oct 2026 10:14:24 GMT

Alphabet will raise its AI‑related capital expenditures beyond the roughly $200 billion it is spending this year, President and Chief Investment Officer Ruth Porat said Monday at Fortune’s Most Powerful Women Summit in Santa Barbara, California.

Porat told Fortune editor‑in‑chief Alyson Shontell that the company expects capex to “increase significantly” next year, adding that Alphabet remains “capacity constrained” as demand for compute from enterprise and government customers grows. She said the build‑out is ongoing because “the demand for compute… suggests that we’re in the buildout here now.”

She noted that Alphabet lifted its 2026 capex outlook to as much as $205 billion in July, a move that caused the stock to fall more than 6 percent the following day. The AI spend is already reshaping the firm’s finances: capital expenditures reached $44.9 billion in the second quarter, with most of that spending directed at technical infrastructure for AI, according to CFO Anat Ashkenazi during the Q2 earnings call. That spending pushed free cash flow to a negative $5.9 billion, the first quarterly cash‑flow deficit in Alphabet’s more than two‑decade public history.

Google Cloud’s revenue rose 82 percent to $24.8 billion, and operating profit more than tripled to $8.8 billion, underscoring the revenue potential of the AI push. When pressed about a Jefferies report warning that cheaper open‑source Chinese models could trigger massive capital destruction in the U.S., Porat called the view “illogical,” arguing that strong demand for AI insights makes capacity constraints sensible.

Porat said companies must focus on two factors to earn attractive returns: delivering value to partners that drives revenue growth, and delivering compute capacity efficiently. She framed responsible deployment as the metric of success, stating, “Anything that is not built for the long run won’t endure for the long run.” Porat traced the spending strategy back to Google’s 2016 shift from “mobile‑first” to “AI‑first,” emphasizing that long‑term investment is essential before demand outpaces supply.

Key facts

Alphabet is spending roughly $200 billion on AI this year. (fortune.com)
Porat said capex will increase significantly in 2026. (fortune.com)
Q2 capital expenditures were $44.9 billion, mostly for AI infrastructure. (fortune.com)
Free cash flow turned negative $5.9 billion in the quarter. (fortune.com)
Google Cloud revenue grew 82 percent to $24.8 billion. (fortune.com)