Alphabet's Server Spending Soars Amid Rising Prices

Alphabet's technical infrastructure spending accounts for the majority of its capital budget. In the second quarter, Alphabet allocated about 60% of its technical infrastructure investment to servers, with the remaining 40% going towards data centers and networking equipment.

The largest single line in Alphabet's budget is server purchases, which are expected to reach near $100 billion this year, based on the midpoint of Alphabet's capital spending guidance. This represents a significant acceleration from last year, with Alphabet's capital expenditures doubling from $24.0 billion in the third quarter of 2025 to $44.9 billion in the second quarter of this year.

The increase in server prices is attributed to memory shortages, with AI demand outpacing supply. According to Bloomberg, prices on servers built around Nvidia's AI chips are rising by more than 15% in many cases, effective on systems shipped early next year.