Google Cloud Boosts CapEx to $85B to Meet Growing Demand for Cloud and AI Services

Google Cloud increased its capital expenditure plan to $85 billion, with $75 billion dedicated to cloud infrastructure and AI processing capacity. The company's Q2 2025 earnings report showed a 32% growth in cloud revenues to $13.6 billion. The majority of the investment went towards servers and data centers to meet growing demand for cloud and AI services.

Alphabet Inc. (GOOGL) has significantly increased its capital expenditure plan, setting aside $85 billion for 2025, with $75 billion allocated to cloud infrastructure and AI processing capacity. This substantial investment underscores the company's commitment to meeting growing demand for cloud and AI services. The Q2 2025 earnings report revealed a 32% growth in cloud revenues, reaching $13.6 billion, driven by robust AI-related workloads.

Alphabet's updated capital expenditure guidance reflects the company's strategic focus on expanding its cloud computing capabilities. The increased investment, which includes $75 billion for cloud infrastructure and AI processing capacity, is expected to drive future growth and competitiveness in the cloud computing market. This move follows Alphabet's announcement of a $85 billion total capital expenditure plan for 2025, with two-thirds of the allocation dedicated to servers and data centers.

The Q2 2025 earnings report highlighted strong performance across Alphabet's core businesses, including Search, YouTube, and Cloud. Cloud revenue surged by 31.7% year-over-year, with operating margins expanding from 11.3% to 20.7%. The company's AI-driven cloud services have shown significant growth, driven by enterprise adoption of generative AI through Google Workspace and general-purpose compute workloads. Despite the substantial capital expenditure plan, analysts remain optimistic about the long-term benefits and potential for higher returns.

Alphabet's Q2 2025 earnings report also addressed investor concerns around capital expenditures and long-term competitiveness in AI. The company's aggressive AI push and strong cloud momentum are seen as justifications for the $234 price target set by Goldman Sachs analyst Eric Sheridan, who maintains a Buy rating on Alphabet stock [2].

In conclusion, Alphabet's increased capital expenditure plan and strong Q2 2025 earnings report demonstrate the company's commitment to growth and innovation in the cloud computing and AI sectors. The investment in cloud infrastructure and AI processing capacity positions Alphabet as a strong competitor in the market, with analysts predicting continued growth and potential for higher returns.

References:
[1] https://www.investors.com/news/technology/google-stock-google-cloud-q22025-earnings/
[2] https://www.benzinga.com/analyst-stock-ratings/reiteration/25/07/46638272/googles-ai-power-play-goldman-says-buy-as-cloud-youtube-search-drive-big-upside