Google to spend record $185bn countering ChatGPT threat

Google is preparing to spend a record $185bn (£138bn) as it races to counter the threat of AI from rivals such as ChatGPT.

The internet search engine giant confirmed on Wednesday night that it would this year double its capital expenditure – an accounting term for costs that include spending on infrastructure and equipment.

Google’s planned spending spree represents the single biggest capital expenditure prediction of any company in history, far outstripping other large spenders in the oil and gas industry and ahead of its tech rivals. Microsoft has forecast spending of more than $100bn this year.

Technology businesses have been spending furiously on data centres, AI, semiconductors and energy infrastructure as they seek to build ever more powerful AI tools in a race for digital superintelligence.

Between them, the world’s largest publicly listed technology giants are forecast to spend more than $500bn this year on AI. That is before hundreds of billions of dollars in anticipated spending from privately held AI labs, such as OpenAI and Anthropic.

Analysts have predicted that tech giants will spend as much as $7tn on building out AI data centres and the accompanying power infrastructure by the end of the decade. The vast spending proposals have prompted fears that AI stocks are in an unsustainable bubble.

Google is doubling its AI spending as it races to avoid being overtaken by ChatGPT. The service’s surprise success has fuelled speculation that the chatbot could one day usurp Google’s products.

Sundar Pichai, Google’s chief executive, told staff in 2023 that ChatGPT represented a “code red” moment, indicating it was a critical threat to the business.

Heavy spending since then has allowed Google to significantly catch up, and its latest Gemini chatbot, in fact, poses a threat to ChatGPT.

Sam Altman, OpenAI’s chief executive, issued his own “code red” warning last month. OpenAI, the developer of ChatGPT, has laid out plans to spend $1.4tn by 2030.

Google said it needed to spend record amounts on infrastructure this year to meet demand for its AI and cloud products. On top of its AI spending, Google’s parent company, Alphabet, also announced it had led a $16bn investment round into Waymo, its driverless-taxi business.

The search giant said its annual revenues had topped $400bn for the first time, climbing 15pc. Its net income, a measure of profit, hit $132bn, up from $100bn a year earlier.

Mr Pichai said Google’s spending was intended to “meet customer demand and capitalise on the growing opportunities we have ahead”.