Alphabet's AI Expansion May Target Rock Bottom as CAPEX Surges 50% and GPU Spending Outpaces Revenue Growth

Alphabet Inc. (GOOG) (GOOGL) continues to expand its artificial intelligence (AI) infrastructure and research capabilities, with recent announcements highlighting its strategic investments in Singapore and the Netherlands. The company's AI research arm, Google DeepMind, has opened a new lab in Singapore focused on collaboration with governments, businesses, and academic institutions across the Asia-Pacific region. This initiative aligns with Alphabet's broader efforts to advance its Gemini AI model and reinforce its position in the global AI landscape according to reports. Simultaneously, Google has expanded its data center footprint in the Netherlands, with a new facility in Winschoten designed to support AI-driven operations and sustainability goals as reported.

Strategic Expansion in Singapore

Google DeepMind's Singapore lab will house research scientists, software engineers, and AI impact experts dedicated to advancing foundational AI research and development. The lab's focus includes enhancing Gemini's core capabilities and applying AI across Google products and cloud services. , Google DeepMind's Chief Operating Officer stated, "This builds on our efforts to pioneer foundational research in linguistic and cultural inclusivity for Asia Pacific, advance Gemini's core capabilities, and apply the latest models across Google products and for Cloud customers." The company has more than doubled its Asia-Pacific team over the past year, reflecting its commitment to the region according to reports.

Infrastructure Growth in the Netherlands

Google's new data center in Winschoten, the Netherlands, marks its third facility in the country and expands the capacity of its europe-west4 cloud region. The facility, which required a €600 million investment, incorporates advanced air-cooling technology and solar panels to reduce water usage and support waste heat reuse for district heating networks as reported. Marco Ynema, Google's data center lead in the Netherlands, emphasized the facility's role in supporting the country's AI ambitions and digital economy according to reports. The company has invested over €3.8 billion in Dutch data centers and digital infrastructure since 2023 as reported.

Gemini 3: A New Era in AI

Alphabet recently launched Gemini 3, a major update to its AI model, which executives describe as a "massive jump" in reasoning and coding capabilities. The model can process text, images, and other media while solving complex scientific and mathematical problems. , Alphabet's CEO highlighted Gemini 3's ability to "read the room," enabling more context-aware interactions. The model's integration into core products like Google Search and AI Mode aims to accelerate Alphabet's AI-driven revenue growth, with in the most recent quarter.

Capital Expenditures and AI Hardware Dynamics

Alphabet's capital expenditures (CAPEX) have surged to support its AI ambitions, reaching $91–93 billion in 2025—nearly 50% above initial projections. A significant portion of this investment is directed toward AI infrastructure, including servers, storage, and NVIDIA GPUs according to analysis. While Google remains a top customer for NVIDIA, concerns persist about the pace of GPU spending outstripping cloud revenue growth. Analysts predict that Alphabet's reliance on NVIDIA's CUDA ecosystem and enterprise demand for standardized AI hardware will remain a challenge in the near term.

Global AI Competition and Regulatory Challenges

Google's AI expansion coincides with heightened competition from rivals like OpenAI and Anthropic, who have also rolled out advanced models. According to reports, the company faces regulatory scrutiny in the UK and EU, where stricter AI and privacy rules are under debate. Despite these challenges, Alphabet's AI investments have driven stock performance, . The company's long-term strategy hinges on balancing CAPEX with sustainable returns, particularly as AI hardware costs and depreciation pressures rise according to analysis.