Google’s AI Budget Could Explode Even Higher as It Runs Out of Capacity

The article argues that Alphabet’s Google is increasing AI capital spending not because demand is weak, but because demand is outpacing available infrastructure. Management lifted 2025 capex guidance to $180 billion-$190 billion after Q1 capex already hit $35.7 billion, signaling an aggressive buildout of chips, data centers, and power capacity. The key bullish point is Google Cloud’s $462 billion backlog, which nearly doubled in one quarter and is more than 10x 2025 cloud revenue of $43.2 billion. More than half of that backlog is expected to convert within 24 months. Internal AI use by Google engineers is also adding to GPU demand, reinforcing the need for more capacity. For GOOG, the market takeaway is that heavy spending may support future revenue growth, though execution risk remains high if returns lag the scale of investment.