Google's global head of energy and power, Amanda Peterson Corio, challenged concerns about excessive AI infrastructure construction in comments to The Information last week. Peterson Corio said building insufficient capacity worries Peterson Corio more than building too much. Peterson Corio cited clear demand from a varied customer base. Peterson Corio said Google is fairly confident that everything Google is currently constructing and funding will find users.
Alphabet retained a full-year capital expenditure forecast ranging from $195 billion to $205 billion. Alphabet also continues to forecast a significant spending increase in 2027. CNBC reported third-quarter capital expenditures of $51.36 billion, below analysts' expectation of $55.09 billion. Free cash flow was negative $9.07 billion. Long-term debt reached $125.1 billion, compared with $21.6 billion a year earlier.
Diluted earnings per share declined from $2.87 to $2.12, missing a consensus estimate of roughly $3. Consolidated revenue increased 25% to $127.6 billion. Google Cloud generated $30.7 billion in revenue, an increase of 103%. TPU system sales contributed meaningfully to growth. The revenue results support Peterson Corio's assessment of demand.
Alphabet said on the earnings call that data centers accounted for 35% of third-quarter technical infrastructure investment. Alphabet said those data centers have useful lives ranging from seven to 40 years. Alphabet said servers and networking equipment accounted for the remaining 65%.
Supply constraints led Google to start using third-party computing capacity at the third quarter's end. Google plans to expand that use during the fourth quarter, which management expects will weigh on margins in the near term. Google Cloud CEO Thomas Kurian told analysts that AI laboratories, capital markets, financial services institutions and enterprises are generating exceptional demand and strong growth. Executives said nearly 100 clients use TPUs. Executives expect revenue recognition for just over 55% of the cloud backlog within the next 24 months.
Alphabet's Class A shares lost 12.6% last Thursday, the worst daily performance since the shares started trading more than 20 years ago. Benzinga Pro data showed Class A shares at $288.43 before Monday's opening, 11.2% below Wednesday's closing price of $324.89. Benzinga Pro market data showed Alphabet shares up 1.31% at $283.51 when published on Monday.
Investors want evidence that the investment will produce returns before spending accelerates in 2027. Peterson Corio's comments suggest Google does not intend to slow investment.
Google Confident in AI Infrastructure Demand Despite High Capital Expenditures
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Summary
Google remains confident in AI infrastructure demand despite high capital costs, according to Amanda Peterson Corio, global head of energy and power. Alphabet’s full-year capex forecast is $195–205 billion, with a surge expected in 2027. Third-quarter spending was $51.36 billion, below estimates. Google Cloud revenue jumped 103% to $30.7 billion, boosted by TPU sales. The company started using third-party computing in Q3, planning to expand it in Q4, which could impact short-term margins. AI + crypto news continues to highlight infrastructure growth amid evolving global crypto policy.
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