Alphabet’s Record AI And Waymo Investment Resets Long Term Expectations
- Finance
ThePostMaster- 0
- 8 minutes read
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Alphabet plans to nearly double its capital expenditures in 2026, with up to $185b earmarked for AI infrastructure investment.
Waymo, Alphabet’s autonomous driving subsidiary, has raised $16b to support a commercial rollout into 20 additional cities.
Together, these commitments mark a major shift in how Alphabet is allocating resources toward AI and autonomous mobility.
For investors tracking NasdaqGS:GOOGL, these decisions come on top of a share price of $322.86 and a 74.9% return over the past year. The stock has also delivered a very large gain over three years and 210.5% over five years, which sets a high bar for what comes next as Alphabet commits to heavy spending.
Alphabet is signaling that AI infrastructure and autonomous driving are core priorities rather than side projects. As these investments roll out, many investors will likely watch how capital intensity, partnership structures, and eventual monetization opportunities compare with the company’s past record of turning large bets into scaled businesses.
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Why Alphabet could be great value
Alphabet’s decision to target up to US$185b of capital expenditure in 2026, alongside Waymo’s US$16b funding at a US$126b valuation, lands on top of very large 2025 results, with full year sales of US$402.8b and net income of US$132.2b. For you as an investor, the message is that Alphabet is choosing to recycle sizeable current profits and cash generation into AI data centers and autonomous driving infrastructure rather than prioritising lower spending or larger near term cash returns.
The heavy AI and Waymo commitment is consistent with existing community narratives that see generative AI as sustaining for Search and Cloud rather than disruptive, and that expect Cloud and AI use cases to spread across Alphabet’s huge user base. These latest moves also sit alongside the view from some investors that Alphabet has been relatively lowly valued compared with other large tech names, which is why this kind of spend now draws a sharper reaction as markets weigh that long term story against current valuation and expectations for earnings progression.
🎁 Strong starting point: Alphabet is committing to record AI-related capex from a base of US$132.2b in 2025 net income and Q4 EPS of US$2.82. This gives it financial capacity many competitors do not have.
🎁 Waymo’s US$16b raise and planned rollout to 20 more cities increase the potential payoff from autonomous driving if commercial uptake and regulatory approvals continue to progress.
⚠️ The US$175b to US$185b 2026 capex range is well above earlier market expectations, so there is clear execution risk if AI and Cloud revenues or margins do not keep pace with this higher spend.
⚠️ Investors have already shown concern through recent share price volatility as Big Tech, including Microsoft and Amazon, outlines similarly large AI budgets. This can pressure sector sentiment if cash returns or earnings growth slow.
