🧠 Food for thought

Implications, context, and why it matters.

Cloud growth comes with a near-doubling in yearly spending

• Google Cloud has a US$460 billion backlog, yet serving it will require far more cash.
• Alphabet plans US$175-US$185 billion in capital expenditures for 2026, up from US$91.4 billion in 2025 1.
• The jump comes from AI infrastructure spending, as customer demand has moved past Google’s current data center capacity 2.
• Free cash flow per share could fall by about two-thirds from 2025 before recovering in later years 1.

Google’s AI infrastructure is turning into a service for its biggest rivals

• AI demand from businesses now includes large tech groups such as Apple.
• Apple and Google signed a multi-year deal for the next Apple Foundation Models, Apple’s in-house AI models, to be based on Google’s Gemini models and cloud technology. The models are set to support future Apple Intelligence features, including a more personalized Siri 3.
• The deal gives Google a route into about 2.5 billion active Apple devices, which could ease its dependence on web search over time 2.
• The arrangement also suggests that building foundational AI now costs so much that even the richest companies may prefer partners, leaving the market with a small group of infrastructure providers 1.