Google plans $75 billion capex in 2025 to support AI demand which is outpacing capacity
As it continues to imbue core services with AI, Google parent Alphabet is planning to deploy $75 billion in capital in 2025. Reporting its fourth quarter and full-year 2024 financials this week, Google CEO Sundar Pichai highlighted the company’s “differentiated full-stack approach to AI innovation.”
“Our sophisticated global network of cloud regions and datacenters provides a powerful foundation for us and our customers, directly driving revenue.” In 2024, Pichai said, Google “broke ground” on 11 new cloud regions and datacenter campuses. “Our leading infrastructure is also among the world’s most efficient. Google datacenters deliver nearly four times more computing power per unit of electricity compared to just five years ago. These efficiencies, coupled with the scalability, cost and performance we offer are why organizations increasingly choose Google Cloud’s platform.”
Looking at business unit results, Google Cloud revenues were up 30% to $12 billion compared to the year-ago quarter. In response to a question, CFO Anat Ashkenazi addressed quarter-over-quarter deceleration in cloud revenue growth. “We do see and have been seeing very strong demand for our AI products in the fourth quarter in 2024. And we exited the year with more demand than we had available capacity. So, we are in a tight supply/demand situation, working very hard to bring more capacity online…We’ll bring more capacity throughout the year.”
In response to a question about AI training and inference demands, against the backdrop of DeepSeek’s market entry, and what it all means for Google, Pichai said the company is in a good position. “There’s frontier model development, but you can drive a lot of efficiency to serve these models really, really well..We lead this period of frontier.”
He continued: “I think a lot of it is our strength of the full stack development, end-to-end optimization, our obsession with cost per query…If you look at the trajectory over the past three years, the proportion of spend toward inference compared to training has been increasing which is good because, obviously, inferences to support businesses with good ROIC…I think that trend is good.”
In sum, Pichai said, “I think part of the reason we are so excited about the AI opportunity is, we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down, which will make more use cases feasible. And that’s the opportunity space. It’s as big as it comes, and that’s why you’re seeing us invest to meet that moment.”
For context, and setting aside the DeepSeek-driven tech sell-off, AI infrastructure investment isn’t slowing down. Google guided at $75 billion in 2025 capex, Microsoft and Meta are both planning to spend north of $60 billion this year, and Amazon, which will provide updated financial tomorrow, will likely guide in a similar range. So between four companies, albeit four of the biggest companies in the world, that’s a quarter trillion dollar on AI infrastructure investment in 2025.
