Google’s-parent company Alphabet has now flagged new risks related to artificial intelligence in its latest annual financial report, describing how the technology is reshaping both opportunities and vulnerabilities. As reported by CNBC The company has now warned that its heavy investment in AI infrastructure could lead to ‘excess capacity’ if demand falls short, and that large leasing arrangements with third-party operators may increase costs and operational complexity. Alphabet also acknowledged the possibility of liabilities if counterparties or vendors fail to deliver.

The $185 billion number

One of the headline figures in Alphabet’s earnings report was $185 billion — the high end of what the company expects to spend on capital expenditures this year. That number, more than double its 2025 capex, rattled investors and erased billions from Alphabet’s market value despite otherwise strong results. The spending reflects the company’s race to secure compute capacity for AI training, inference, and cloud services.As per the CNBC report, in order to finance its AI ambitions, Alphabet is also planning a bond sale of $20 billion. The deal will be split across multiple tranches, including a rare 100-year sterling bond, and is reportedly five times oversubscribed. Bloomberg first reported the funding plan, which was initially expected to reach $15 billion. Alphabet’s long-term debt has already quadrupled in 2025 to $46.5 billion, following a $25 billion bond sale in November. CFO Anat Ashkenazi said the company is committed to investing responsibly while maintaining a healthy financial position.

Google CEO Sundar Pichai’s concerns

On the earnings call, CEO Sundar Pichai said what keeps executives up at night is compute capacity — specifically power, land, and supply chain constraints. “How do you ramp up to meet this extraordinary demand for this moment?” he asked. Alphabet, along with Microsoft, Meta, and Amazon, is projected to increase capex by more than 60% in 2026, loading up on high-priced chips, building new facilities, and expanding networking infrastructure.At the heart of Google’s AI strategy is Gemini, its large language model and AI assistant. Pichai said the Gemini app now has 750 million monthly active users, up from 650 million last quarter. While adoption is strong, Google acknowledged in its filing that generative AI could reduce reliance on traditional internet search, potentially disrupting its core advertising business. “There is no assurance that we will adapt effectively and competitively to meet this shift,” the company warned.