Google just spent $14 billion on servers in 91 days, plans even higher spending soon
(2025/07/24)
- Reference: 1753342093
- News link: https://www.theregister.co.uk/2025/07/24/alphabet_q2_2025/
- Source link:
Google’s parent company Alphabet has increased its capex budget for the year by $10 billion and now expects to spend $85 billion this year, and more in 2026.
News of Alphabet’s splurge came on an earnings call on which execs discussed Wednesday’s [1]Q2 results announcement [PDF] in which the company revealed revenue grew 14 percent year over year to $96.4 billion.
Google Cloud revenue grew even faster, with its $13.6 billion representing 31 percent year over year growth and putting the business unit on target for $50 billion annual revenue - $20 billion ahead of HPE and a handful of billions behind Cisco. Operating income – a measure of profit Alphabet uses for its operating segments – grew by 141 percent at the G-Cloud, from Q2 2024’s $1.2 billion to $2.8 billion. That’s a welcome outcome for investors given Google Cloud did not produce a profit for [2]15 years .
[3]
Execs attributed the growth in revenue and profit to demand for Google Cloud Platform’s core products, plus AI Infrastructure, and Generative AI Solutions.
[4]
[5]
CEO Sundar Pichai said Google Cloud doubled the number of deals valued at over $250 million year over year, and in the first half of 2025 signed as many million-dollar deals as it did in all of 2024. Customer numbers rose nearly 28 percent quarter over quarter.
“Our churn rates are very low. And we are much more efficient in the investments needed to grow those lines of businesses,” he said. “So you are seeing all that play out in our margin trajectory, particularly if you look at it … sequentially over the past few years.”
[6]
He also warned, “Supply constraints and elevated capex signal persistent infrastructure bottlenecks.”
Alphabet’s going to spend more anyway. CFO Anat Ashkenazi said demand for Google services is so high the company revised its capital expenditure plans for this financial year from $75 billion to $85 billion. He also revealed that capex reached $22.4 billion in Q2 and “The vast majority … was invested in technical infrastructure, with approximately two-thirds of investments in servers and one-third in data centers and networking equipment.”
Do the math: that’s around $14 billion on servers in a single quarter.
[7]
Aren’t you glad you don’t have to rack them all?
People at Alphabet are probably doing so right now, because Ashkenazi said the company will bring more datacenters online “towards the back end of the year.”
[8]Google AI Overviews are killing the web, Pew study shows (again)
[9]Sovereign-ish: Google Cloud keeps AI data in UK, but not the support
[10]Alt cloud platform Railway forced to pause lowest tiers after onrush of GCP customers
[11]Google, AWS say it's too hard for customers to use Linux to swerve Azure
A new generation of Google-eyed youth
Ever since generative AI came along and gave netizens a new way to seek information online, many have predicted Google could suffer.
Such predictions appear to have been incorrect.
“We see AI powering an expansion in how people are searching for and accessing information, unlocking completely new kinds of questions you can ask Google,” Pichai told investors. “Overall queries and commercial queries on search continue to grow year over year, and our new AI experiences significantly contributed to this increase in usage. We are also seeing that our AI features cause users to search more as they learn that search can meet more of their needs.”
“That's especially true for younger users,” the CEO said. “We know how popular AI overviews are because they are now driving over ten percent more queries globally for the types of queries that show them, and this growth continues to increase over time.”
Alphabet’s balance sheet backs up those assertions, as revenue from search jumped almost 12 percent to reach $54.2 billion.
YouTube advertising revenues increased 13 percent to $9.8 billion, while combined revenue from subscription platforms and devices grew 20 percent to $11.2 billion. YouTube subs were the big driver there.
Pedal to the metal
Alphabet’s “Other Bets” segment produced $373 million in revenue, but a $1.2 billion loss.
The Waymo robo-taxi business is part of that segment and Pichai praised it for achieving “great momentum.”
“The Waymo driver has now autonomously driven over one hundred million miles on public roads,” he enthused.
CFO Anat Ashkenazi said Alphabet is “allocating more resources to businesses like Waymo, where we see opportunities to create additional value.”
During the Q&A section of the earnings call, Pichai took a question about smart glasses and replied “I think AI will spur a whole new wave of innovation there” and rated the devices “an exciting new emerging category.”
“But I still expect phones to be at the center of the experience for the next two to three years at least,” he added.
Alphabet shares popped by a couple of percent in after-hours trading. ®
Get our [12]Tech Resources
[1] https://abc.xyz/assets/cc/27/3ada14014efbadd7a58472f1f3f4/2025q2-alphabet-earnings-release.pdf
[2] https://www.theregister.com/2023/04/26/alphabet_q1_2023/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aIZNOj419fmMafz2_HPU3gAAAAc&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aIZNOj419fmMafz2_HPU3gAAAAc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aIZNOj419fmMafz2_HPU3gAAAAc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2025/07/22/google_ai_overviews_suppress_search/
[9] https://www.theregister.com/2025/07/10/google_uk_data_sovereignty/
[10] https://www.theregister.com/2025/06/16/railway_pauses_lowest_tiers/
[11] https://www.theregister.com/2025/04/17/swapping_linux_for_microsoft_is_hard/
[12] https://whitepapers.theregister.com/
News of Alphabet’s splurge came on an earnings call on which execs discussed Wednesday’s [1]Q2 results announcement [PDF] in which the company revealed revenue grew 14 percent year over year to $96.4 billion.
Google Cloud revenue grew even faster, with its $13.6 billion representing 31 percent year over year growth and putting the business unit on target for $50 billion annual revenue - $20 billion ahead of HPE and a handful of billions behind Cisco. Operating income – a measure of profit Alphabet uses for its operating segments – grew by 141 percent at the G-Cloud, from Q2 2024’s $1.2 billion to $2.8 billion. That’s a welcome outcome for investors given Google Cloud did not produce a profit for [2]15 years .
[3]
Execs attributed the growth in revenue and profit to demand for Google Cloud Platform’s core products, plus AI Infrastructure, and Generative AI Solutions.
[4]
[5]
CEO Sundar Pichai said Google Cloud doubled the number of deals valued at over $250 million year over year, and in the first half of 2025 signed as many million-dollar deals as it did in all of 2024. Customer numbers rose nearly 28 percent quarter over quarter.
“Our churn rates are very low. And we are much more efficient in the investments needed to grow those lines of businesses,” he said. “So you are seeing all that play out in our margin trajectory, particularly if you look at it … sequentially over the past few years.”
[6]
He also warned, “Supply constraints and elevated capex signal persistent infrastructure bottlenecks.”
Alphabet’s going to spend more anyway. CFO Anat Ashkenazi said demand for Google services is so high the company revised its capital expenditure plans for this financial year from $75 billion to $85 billion. He also revealed that capex reached $22.4 billion in Q2 and “The vast majority … was invested in technical infrastructure, with approximately two-thirds of investments in servers and one-third in data centers and networking equipment.”
Do the math: that’s around $14 billion on servers in a single quarter.
[7]
Aren’t you glad you don’t have to rack them all?
People at Alphabet are probably doing so right now, because Ashkenazi said the company will bring more datacenters online “towards the back end of the year.”
[8]Google AI Overviews are killing the web, Pew study shows (again)
[9]Sovereign-ish: Google Cloud keeps AI data in UK, but not the support
[10]Alt cloud platform Railway forced to pause lowest tiers after onrush of GCP customers
[11]Google, AWS say it's too hard for customers to use Linux to swerve Azure
A new generation of Google-eyed youth
Ever since generative AI came along and gave netizens a new way to seek information online, many have predicted Google could suffer.
Such predictions appear to have been incorrect.
“We see AI powering an expansion in how people are searching for and accessing information, unlocking completely new kinds of questions you can ask Google,” Pichai told investors. “Overall queries and commercial queries on search continue to grow year over year, and our new AI experiences significantly contributed to this increase in usage. We are also seeing that our AI features cause users to search more as they learn that search can meet more of their needs.”
“That's especially true for younger users,” the CEO said. “We know how popular AI overviews are because they are now driving over ten percent more queries globally for the types of queries that show them, and this growth continues to increase over time.”
Alphabet’s balance sheet backs up those assertions, as revenue from search jumped almost 12 percent to reach $54.2 billion.
YouTube advertising revenues increased 13 percent to $9.8 billion, while combined revenue from subscription platforms and devices grew 20 percent to $11.2 billion. YouTube subs were the big driver there.
Pedal to the metal
Alphabet’s “Other Bets” segment produced $373 million in revenue, but a $1.2 billion loss.
The Waymo robo-taxi business is part of that segment and Pichai praised it for achieving “great momentum.”
“The Waymo driver has now autonomously driven over one hundred million miles on public roads,” he enthused.
CFO Anat Ashkenazi said Alphabet is “allocating more resources to businesses like Waymo, where we see opportunities to create additional value.”
During the Q&A section of the earnings call, Pichai took a question about smart glasses and replied “I think AI will spur a whole new wave of innovation there” and rated the devices “an exciting new emerging category.”
“But I still expect phones to be at the center of the experience for the next two to three years at least,” he added.
Alphabet shares popped by a couple of percent in after-hours trading. ®
Get our [12]Tech Resources
[1] https://abc.xyz/assets/cc/27/3ada14014efbadd7a58472f1f3f4/2025q2-alphabet-earnings-release.pdf
[2] https://www.theregister.com/2023/04/26/alphabet_q1_2023/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aIZNOj419fmMafz2_HPU3gAAAAc&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aIZNOj419fmMafz2_HPU3gAAAAc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aIZNOj419fmMafz2_HPU3gAAAAc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2025/07/22/google_ai_overviews_suppress_search/
[9] https://www.theregister.com/2025/07/10/google_uk_data_sovereignty/
[10] https://www.theregister.com/2025/06/16/railway_pauses_lowest_tiers/
[11] https://www.theregister.com/2025/04/17/swapping_linux_for_microsoft_is_hard/
[12] https://whitepapers.theregister.com/
Re: "Alphabet shares popped by a couple of percent in after-hours trading."
Roland6
Not sure, but with those sorts of numbers, we can expect some activist investors (Carl Icahn?) sue because that’s money that should be going to shareholders…
Re: "Alphabet shares popped by a couple of percent in after-hours trading."
vtcodger
The stock price went up a bit, if that's what "the line" is in the king's English/
Re: "Alphabet shares popped by a couple of percent in after-hours trading."
Jon 37
Line went up by 2%
A Non e-mouse
$85 BIllion is a lot to spend on streaming cat & pr0n videos.
Excused Boots
Ah no, cat and pr0n are the only justifiable excuses for spending that amount of money.
The price of progress?
vtcodger
All that money just to aggravate me with more varied mindless suggestions and weird assumptions. It's impressive. But is it really necessary?
Re: The price of progress?
Anonymous Coward
Did they get any more kit for the increased spend?? … or did it just offset the Orange Shitgibbons tariffs on tech from China/Vietnam/Malaysia/Thailand.
v13
> [...] now expects to spend $85 billion this year, and more in 2026.
That's $1.6B per week or one Cassini mission every three weeks.
Blackrock
Anonymous Coward
Blackrock beat them. $15 billion on Bitcoin. $4 billion in 2 weeks at one point. And ... they don't even own anything physical for it, just switch states in memory chips!
Although Microstrategy trump everyone I think and have abandoned pretence of being a software company, circa $60 billion for switch states.
"Alphabet shares popped by a couple of percent in after-hours trading."
To translate from USAian to the King's English, does that mean the line went up or the line went down?