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The emergence of AI not only transforms the world in a revolutionary manner, but is a significant catalyst for big techs business, which has clearly reflected in the earning reports of tech companies. Meanwhile big techs are continuing to pour more money in AI front to win the AI arm race.
In the Q2 earnings, Google reported that cloud revenues increased by 32% to $13.6 billion in the period. The demand is so high for Google’s cloud services that it now amounts to a $106 billion backlog.
As part of its Q2 earnings, Google increased its forecast for capital expenditures in 2025 to $85 billion due to “strong and growing demand for its Cloud products and services” as it continues to expand infrastructure to power more AI services that use its cloud technology. That’s up from the $75 billion projection that Google provided in February. Google is going to spend more this year than it previously expected due to the growing demand for cloud services, which has created a backlog.
The increased forecast comes as demand for cloud services surges across the tech industry as AI services increase in popularity. As a result, big techs are doubling down on infrastructure to keep pace with demand and are planning multi‑year buildouts of data centers.
Google’s $85 billion capital spending is a signal that it’s a tight supply environment. The vast majority of Google’s capital spend was invested in technical infrastructure during the Q2, with approximately two-thirds of investments going to servers and one-third in data center and networking equipment.
Also the updated outlook reflects additional investment in servers, the timing of delivery of servers and an acceleration in the pace of data center construction, primarily to meet Cloud customer demand. Despite the company’s “improved” pace of getting servers up and running, investors should expect further increase in capital spending in 2026 due to the demand as well as growth opportunities across the company. It is reasonable to expect that Google will record more expenses over time, which will make profits look smaller undoubtedly.Complete digital access to quality Glebors financial topic with expert analysis from industry leaders.
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