Las Vegas: Alphabet said Wednesday that despite turbulent tariffs on the U.S., it is still committed to spending about $75 billion this year to build the capacity of data centers and is trying to assure investors that its AI plans have good returns.
Investors are confused by the huge capital costs of AI projects, especially when U.S. President Donald Trump’s uncertainty over tariffs Roil markets and blinds the economic outlook.
CEO Sundar Pichai said the investment will buy chips and build the servers needed to burn the core products of letters, including searches, while supporting the development of AI services such as its Gemini Model.
“There is a great opportunity for AI,” he said.
Alphabet’s capital expenditure debuted in February, 29% higher than analysts’ expectations at the time.
Asked about the possibility that U.S. tariffs increase the cost of building data centers, Sachin Gupta, vice president and general manager of the infrastructure unit at Google Cloud, said the cost of imported hardware could climb, but customer demand continues to increase investment.
“We’re all dealing with what’s going on in tariffs,” he told Reuters.
Trump said Wednesday that he would temporarily lower the large amount of responsibilities he just imposed on dozens of countries, while further increasing tariff pressure on China. Alphabet shares rose nearly 10%, which is $1.5 trillion in earnings for “Magnificent Seven” technology stock.
A Microsoft executive in a LinkedIn post this week also re-emphasized the company’s plan to spend more than $80 billion on AI infrastructure in 2025. MetaPlatforms said it will cost up to $65 billion.
Chiraj Mehta, chief analyst at Constellation Research, said AI represents one of two key areas, where companies continue to invest despite macroeconomic uncertainty.
“The early success of customers who chose Google Cloud as their preferred AI platform is strengthening the case of continued aggressive investment,” he said.
Clients including Turbotax Maker Intuit, Pizza Maker Papa John’s and Verizon talked about how AI can help their business in the conference.
Its chief data officer Ashok Srivastava said Intuit is in its plan to integrate AI into its financial services software.
Kevin Vasconi, chief digital officer of Papa John, said he did not see any slowdown in the company’s AI spending, adding: “I can get the rewards for AI-based projects than any other project right now.”
Verizon said earlier this week that its customer service representatives used Google-model AI assistants to reduce call time and release it to customers for sale, resulting in a surge in sales.
