STORY: Google parent Alphabet shares slid in after-hours trade Tuesday after its cloud unit posted weak sales and despite the company announcing a plan to spend big on AI.
The tech giant said it would spend $75 billion on its AI buildout this year– 29% more than Wall Street expected.
However investors began signaling impatience over profitability.
Shares of the Google parent fell 9% in extended trading.
That roughly offsets the company’s gains on the year so far.
One analyst told Reuters that up until now, Google Cloud had grown fast enough to tamp down worry over ramped up spending.
Alphabet CEO Sundar Pichai defended the dramatic increase on a conference call with analysts.
Some are raising questions about AI capital spend by Google and U.S. rivals after the emergence of China’s
seemingly low-cost DeepSeek.
Pichai said Google’s Gemini family of AI models is comparable in efficiency to DeepSeek and that, quote, “The cost of actually using (AI) is going to keep coming down.”
Alphabet has been spending heavily on an infrastructure development to support AI research and integration into products such as search and cloud services.
The company’s CFO said the majority of capex for 2025 would go into building servers and data centers.
Alphabet plans to spend as much as $18 billion in the first quarter.
That’s a far bigger number than the roughly $6 million Chinese rival DeepSeek says it spent on the final training run to develop its AI model.
Developers at leading U.S. AI firms say DeepSeek’s total training spend was likely much higher.
However the news about what it says it spent shocked tech stocks in January, contributing to Nvidia’s record one-day drop of $593 billion in market value.