Alphabet, the parent company of the popular search engine Google, has reiterated its commitment to invest approximately $75 billion this year in expanding its data center capacity, despite the ongoing uncertainty surrounding US tariffs. The company also sought to reassure investors that its Artificial Intelligence (AI) initiatives are generating positive returns.
Investors are expressing concern regarding the substantial capital expenditures associated with AI projects, particularly amidst market volatility and a clouded economic outlook due to the uncertainty surrounding potential tariffs imposed by US President Donald Trump.
When questioned about the possibility of US tariffs increasing the cost of data center construction, Sachin Gupta, Vice President and General Manager for Google Cloud’s infrastructure division, acknowledged that the expense of importing hardware might rise. However, he emphasized that continued customer demand necessitates the increased investment.
“We’re all processing what’s happening with tariffs,” he told Reuters.
On Wednesday, President Trump announced a temporary reduction in the significant duties recently imposed on numerous countries, while simultaneously escalating tariff pressure on China. Alphabet’s shares closed nearly 10% higher, contributing to the $1.5 trillion gain in market capitalization for the “Magnificent Seven” technology stocks.
A Microsoft executive also reinforced the company’s plans this week in a LinkedIn post, highlighting their intention to spend over $80 billion on AI infrastructure in 2025.
Meta Platforms has also indicated its plans for capital expenditure of up to $65 billion.
Chiraj Mehta, Principal Analyst at Constellation Research, noted that AI, along with cybersecurity, represents one of the two key areas where enterprises have maintained their investment strategies despite macroeconomic uncertainty.
“Early success from customers who have chosen Google Cloud as their preferred AI platform is reinforcing the case for continued aggressive investment,” he stated.
Customers such as Intuit, the maker of TurboTax, pizza chain Papa John’s, and telecommunications giant Verizon, spoke at a conference about the ways in which AI is benefiting their businesses.
Ashok Srivastava, Chief Data Officer at Intuit, stated that the company is “doubling down” on its plans to integrate AI into its financial services software.
Kevin Vasconi, Chief Digital Officer at Papa John’s, indicated that he does not foresee any slowdown in the firm’s AI spending, adding, “I can get a better return on an AI-based project than I can with any other project right now.”
Earlier this week, Verizon reported that an AI assistant built using Google models for the company’s customer service representatives has reduced call times and enabled them to focus on selling products to customers, resulting in a significant increase in sales.
