Alphabet to invest $75 billion in data center this year despite tariff uncertainty  

The tech giant made the announcement on Wednesday during its annual Google Cloud conference, where CEO Sundar Pichai emphasized that the capital expenditure would fund key infrastructure, specifically chips and servers, to power Alphabet’s core services like Google Search and support the ongoing development of its AI capabilities, including its Gemini model.

“The opportunity with AI is as big as it gets,” said Pichai, who made an unexpected appearance at the event.

The scale of Alphabet’s planned capital spending was nearly 30% higher than analysts had initially forecast, raising eyebrows among investors wary of AI’s long-term return on investment, especially amid macroeconomic volatility and political uncertainty stemming from U.S. trade policy.

“We’re all processing what’s happening with tariffs. But we continue to see strong demand that warrants the investment,” said Sachin Gupta, VP and GM of Google Cloud’s infrastructure division.

Trump announced on Wednesday a temporary easing of some newly imposed tariffs while intensifying pressure on Chinese imports—a move that triggered a significant rally in tech stocks.

Alphabet’s shares surged nearly 10%, contributing to a collective $1.5 trillion gain in market capitalization among the so-called Magnificent Seven tech firms.

Mark Zuckerberg’s Meta Platforms has projected AI-related capital expenditure of up to $65 billion this year.

While highlighting the growing competition between U.S. and Chinese AI technologies, particularly in developing nations, Smith emphasized the need for a proactive international strategy to ensure the U.S. maintains its edge in the global AI landscape.

He said China is now replicating this strategy in AI by subsidizing access to critical technologies like chips and promising to build local AI data centers in developing nations. The strategy aims to lock these nations into China’s AI ecosystem for the long term.