Dive Brief:
- Google plans to increase capital investments to $75 billion this year in an effort to expand its AI and cloud capacity, CEO Sundar Pichai said Tuesday in the company’s Q4 2024 earnings report. The company spent $52.5 billion in capital expenditures in 2024.
- Google will direct the majority of its growing CapEx to relieving capacity bottlenecks through upgrades to infrastructure, including cloud servers and data centers, CFO Anat Ashkenazi said during a Tuesday earnings call.
- “We exited the year with more demand than we had available capacity,” Ashkenazi said. “We are in a tight supply demand situation, working very hard to bring more capacity online.”
Dive Insight:
Massive AI infrastructure investments are the new normal in cloud. Capacity constraints are a common theme, too.
Microsoft promised in January to spend $80 billion on AI-enabled data centers during its current fiscal year and said it was vexed by power and capacity shortages during the final quarter of last year.
Amazon, which reports earnings Thursday, was projected to spend $75 billion on capital investments last year, the majority of which was to “support the growing need for technology infrastructure,” CFO Brian Olsavsky said during an October earnings call.
“We have more demand that we could fulfill if we had even more capacity today,” Amazon CEO Andy Jassy said during the call. “Pretty much everyone today has less capacity than they have demand for, and it’s really primarily chips that are the area where companies could use more supply.”
Pichai touted gains in data center efficiency through Google’s deployment of in-house TPU chips and AI Hypercomputer architecture Tuesday. “We develop every component of our technology stack, including hardware, compilers, models and products,” he said. “This approach allows us to drive efficiencies at every level from training and serving to developer productivity.”
As data center construction progressed, Google Cloud saw fourth quarter revenues grow 30% year over year to $12 billion. Cloud segment revenues for the full year were up 31% to $43.4 billion.
The company plans to invest roughly $16 billion to $18 billion in capital expenditures during the first quarter, according to Ashkenazi.
