Google's parent company's capex hit $22.4 billion in the second quarter of 2025, the "vast majority" of which went on technical infrastructure.

Of that, around two-thirds was spent on servers, and the remaining third on data centers and networking equipment. Despite this, Alphabet said that its cloud computing unit is still operating in a "tight demand-supply environment," which it expects will continue into 2026.

For comparison, the first quarter of 2025 saw a capex of $17.2 billion, and Q2 of 2024 just $13bn.

Speaking during the company's earnings call on July 23, Alphabet CFO Anat Ashkenazi said that the company is also upping its annual capex expectations, from previous estimates of $75bn to $85bn.

Ashkenazi said this "reflects additional investment in servers, the timing of delivery of servers, and an acceleration in the pace of data center construction, primarily to meet cloud customer demand," adding that the company expects this will increase further in 2026, which Google would detail in a later earnings call.

Earlier this year, other cloud giants similarly made large capex commitments, with Microsoft pledging $80 billion in spending, Amazon $100bn (including warehouses), and Meta expecting $60-65bn. It is yet to be seen if, after the latest quarter, those competitors will similarly increase their projections.

The increased capex has also led to a growth in depreciation, with Google increasing its depreciation $1.3 billion year over year to $5 billion, reflecting a growth rate of 35 percent, a trend that is expected to increase further in Q3.

Despite the company's investment in hardware, it is still experiencing some capacity issues.

Ashkenazi told investors: "Obviously, we're working hard to bring more capacity online, which means data centers and servers are coming online, and we see more of an increase towards the back end of the year. But we're increasing capacity with every quarter that goes by.

She added: "This is not the type of investment that's a light switch. It takes time to make this investment. So what you're seeing now is investments we made some time ago that's now translating to additional capacity coming online, but more of that towards the back end of the year. I will say it's important as you think about cloud growth, not to think about this in a linear fashion. Because the quarter-on-quarter growth rates could depend on the timing of capacity delivery and when that comes online."

While spending is continuing to increase, the company has seen strong results in its cloud unit.

Revenue for Google Cloud in the quarter increased 32 percent to $13.6 billion. The unit's backlog further increased 18 percent sequentially in Q2 and 38 percent year over year, reaching $106 billion at the end of the quarter.

The cloud business has now achieved an annual revenue run rate of more than $50 billion, and CEO Sundar Pichai told investors that this was demonstrated by some key statistics: "One, the number of deals over $250 million doubling year over year. Two, in the first half of 2025, we signed the same number of deals over $1 million that we did in all of 2024. Three, the number of new GCP customers increased by nearly 28 percent quarter over quarter."

Operating income for Google Cloud was $2.83 billion, up year on year from $1.2bn.

Notably, this quarter revealed that OpenAI would be a Google Cloud customer, despite the AI company being in direct competition with Google's DeepMind AI unit, and ChatGPT posing a threat to Google's search business. The AI company is reportedly planning to use Google's TPUs via Google Cloud (alongside Microsoft, Oracle, and CoreWeave deals).

Speaking on the deal with OpenAI, CEO Pichai did not elaborate on the two companies' plans, but said: "Google Cloud is an open platform, and we have a strong history of supporting great companies, startups, AI labs, etc. So super excited about our partnership [with OpenAI] there on the cloud side. And we look forward to investing more in that relationship and growing it there."

Other key announcements from the quarter include Google winning major contracts with the US Department of Defense and the UK government.

The company also backed away from plans to build a data center in Berlin, Germany, citing a "thorough review of feasibility, general market developments, and our business priorities" for the decision. In the US, Google has been confirmed as being behind the Project Flo data center campus in Indianapolis, Indiana.