Google CEO Sundar Pichai stated on October 20, 2026, that the company is prioritizing internal AI development over immediate cloud revenue. Limited computing resources are being directed primarily to Google DeepMind projects rather than being sold to external cloud customers.
The cloud division reported a year-over-year revenue increase of 82% to $24.8 billion in Q2 2026, with an operating margin of 35.6%. As of October 2026, Google Cloud holds a backlog of $514 billion, which serves as a financial cushion during this period of resource rationing.
Alphabet has projected capital expenditures of $195–205 billion for 2026, with the majority allocated to AI infrastructure. Co-founder Sergey Brin has reportedly been involved in resolving internal conflicts regarding the allocation of scarce computing power between internal research and external clients.
