Alphabet, Google’s parent company, has reiterated its plan to spend around $75 billion this year to expand its data center capacity despite growing concerns over U.S. tariffs and the hefty costs tied to AI investments.
Investors have been uneasy about the soaring capital expenditures required for AI development, especially as market uncertainty deepens with renewed tariff tensions under U.S. President Donald Trump.
CEO Sundar Pichai, making an unexpected appearance at Alphabet’s annual cloud conference, said the investment would go toward chips and servers essential for enhancing core products like Search and powering AI tools such as the Gemini model.
Banking on ‘big’ opportunity
“The opportunity with AI is as big as it gets,” he said.
“Getting advances into the hands of both consumers and enterprises is something we are really focused on.”
Alphabet’s planned spending, first disclosed in February, exceeded Wall Street expectations at the time by 29%. The budget will cover a wide range of infrastructure needs—from chips and servers to networking hardware—essential for supporting core services like Search and scaling AI-powered enterprise tools.
Addressing the possible impact of tariffs on data center construction, Sachin Gupta, VP and GM of Google Cloud’s infrastructure division, acknowledged that hardware import costs could rise. However, he emphasized that strong customer demand continued to justify the ramped-up investment.
“We’re all processing what’s happening with tariffs,” he told Reuters.
Big tech’s AI spending race
The timing of Alphabet’s announcement comes amid heightened global economic uncertainty.
U.S. President Donald Trump on Wednesday announced a 90-day pause on tariffs that he had just imposed on dozens of countries while further ramping up tariff pressure on China, adding a layer of unpredictability to the broader market environment.
A day before, the U.S. President also signed four executive orders that aim to revive the coal industry, despite its long-standing decline.
In a move framed as a response to increasing electricity demand from data centers and artificial intelligence, he called coal a “critical” mineral and promised to accelerate its production and use.
Google isn’t alone in ramping up AI spending.
As per a Reuters reports, Microsoft plans to invest over $80 billion in AI infrastructure in 2025. Meta Platforms has also announced it could spend as much as $65 billion.
Since OpenAI’s ChatGPT took off in late 2022, Big Tech companies have been racing to lead the generative AI space. But with capital expenditures climbing rapidly, investors are growing more concerned about when these multi-billion-dollar bets will start delivering tangible returns.
Google operates a global network of data centers to power its services, with locations in Europe, Asia, and North America.