Sundar Pichai Says Alphabet Can't Build AI Capacity Fast Enough, and Anthropic Has Secured 5 Gigawatts of It.

Alphabet faces persistent supply constraints on artificial intelligence computing capacity despite raising its 2026 capital expenditure guidance to between $195 billion and $205 billion. CEO Sundar Pichai highlighted that surging customer demand continues to outpace infrastructure supply, signaling strong commercial momentum in AI adoption. A major portion of this scarce capacity has been secured by Anthropic, which holds agreements covering over 1 gigawatt of Google TPU capacity in 2026 and an additional 5 gigawatts coming online starting in 2027 through Broadcom. This robust enterprise demand is driving massive financial growth for Google Cloud. In the second quarter, cloud revenue surged 82% year-over-year to $24.8 billion, while operating income more than tripled to $8.8 billion as operating margins expanded to 36%. Alphabet's total cloud backlog climbed to $514 billion. While heavy capital expenditures of $44.9 billion in Q2 required external debt and equity financing, locking in high-volume, multi-year capacity contracts provides Alphabet with solid pricing power and long-term revenue visibility.