Alphabet is striking a more confident tone on artificial intelligence, signaling that its heavy investments are beginning to pay off across its business as Google accelerates efforts to stay competitive in the fast-moving AI race.

Speaking on the company’s post-earnings call on Wednesday, executives pointed to growing user adoption and rising enterprise demand following the release of Gemini 3, a model that has strengthened Google’s position after investor concerns last year that it was falling behind rivals.

Chief Executive Officer Sundar Pichai said Alphabet is now seeing AI-driven revenue growth beyond its cloud unit, extending into both consumer and enterprise products. That broader impact has prompted the company to consider nearly doubling capital expenditure in 2026 to between $175bn and $185bn, largely to expand AI computing capacity.

The Gemini app, which competes with OpenAI’s ChatGPT, ended the December quarter with more than 750 million monthly active users, up from 650 million in the previous quarter. Pichai added that user engagement has increased significantly since the launch of Gemini 3. The model has also been integrated into Google Search’s AI Mode and now supports the company’s enterprise AI offering, which has reached 8 million paying licenses.

While Alphabet’s elevated spending outlook initially unsettled investors, confidence was buoyed by strong performance in its cloud business, where revenue rose 48% in the December quarter. The results reinforced investor belief that Alphabet’s AI investments are beginning to translate into financial returns.

Alphabet shares dipped in early trading on Thursday, following a sharp rally in 2025 and modest gains so far in 2026, as investors weighed the scale of future spending against the company’s improving AI-driven growth.

Source: Reuters News