This article first appeared on GuruFocus.
Alphabet (GOOGL, Financials) slipped after Google announced a new Texas data center tied to its expanding AI infrastructure push.
The company has started construction on the Meitner Energy Center in Gray and Roberts counties. The project will include a data center powered mostly by clean energy, including more than one gigawatt from wind, solar and battery storage.
For Google, the facility adds more capacity for services such as Search, Gmail, Maps, Cloud and AI workloads.
For investors, the concern is cost. Alphabet plans to spend as much as $190 billion this year on capital projects, much of it tied to AI infrastructure.
The company is also raising outside capital, including an $84.75 billion equity offering, to help fund the buildout.
The opportunity is large, but investors want proof that heavy AI spending will turn into stronger cloud growth and higher returns.
The next test is whether Alphabet can scale AI infrastructure without pressuring margins too much.
