Alphabet Will Spend as Much as $205 Billion This Year. The Depreciation Bill Starts Landing in 2027.

Alphabet raised its 2026 capital expenditure guidance to $195-205 billion, with about 60% going to servers that depreciate over six years. This will result in approximately $20 billion in annual depreciation expense starting in 2027, creating significant pressure on earnings. However, strong revenue growth of 24% and Google Cloud's 82% growth with tripled operating income suggest the spending is generating returns that currently outpace the depreciation charges.