Amazon and Alphabet increase capital spending for AI and cloud infrastructure

Amazon and Alphabet are significantly increasing capital expenditures to expand their data center and artificial intelligence infrastructure. For 2026, Amazon projects spending approximately $220 billion, while Alphabet has raised its guidance to a range of $195 billion to $205 billion.

This aggressive investment is driven by high demand for cloud computing and AI services. Alphabet reported that Google Cloud revenue grew 82% year-over-year to $24.77 billion in Q2 2026, with segment operating income tripling to $8.8 billion. Similarly, Amazon Web Services (AWS) saw revenue growth accelerate to 37% year-over-year during the second quarter.

Despite the massive scale of spending, which impacts short-term free cash flow, both companies view these investments as essential to meet projected computing capacity needs through 2027 and beyond.