Alphabet Raises AI Spending But Still Can't Meet Demand: 'We're Still in a Supply Constraint Environment'

Alphabet Inc.

(NASDAQ:GOOG) (NASDAQ:GOOGL) said demand for its artificial intelligence (AI) services continues to outpace available computing capacity despite raising its capital spending outlook.

Demand Continues to Outpace Available Capacity The Google parent company raised its 2026 capital expenditure outlook to $195 billion to $205 billion, up from its prior forecast of $180 billion to $190 billion.

During Alphabet's second-quarter earnings call, CEO Sundar Pichai said Google continues to face capacity constraints as demand for AI products and cloud services exceeds available infrastructure.

"Demand for our models is translating to strong token usage across developers and enterprise customers, and we continue to be supply constrained, a sign of momentum and rapid adoption," Pichai added.