Alphabet reported a $51.4 billion capital expenditure for the third quarter of 2026, more than double the amount it spent a year earlier, as the Google parent continues to scale its artificial‑intelligence infrastructure. The company reaffirmed its 2026 capital budget range of $195 billion to $205 billion and signaled that spending is expected to rise sharply in 2027.
Spending Outlook and Industry Context
To meet the low end of its 2026 guidance, Alphabet would need to invest roughly $63 billion in the fourth quarter alone, a figure that would exceed the third‑quarter total by about $12 billion after a $6 billion increase from the second quarter. Microsoft, which reported on the same day, disclosed $45.2 billion of capital spending for its fiscal first quarter ending September 30, falling short of its own $50 billion forecast because some third‑party capacity arrived later than planned. Microsoft expects its outlays to accelerate in the second half of its fiscal year, focusing on CPUs and GPUs.
Nvidia: Chipmaker Riding the AI Wave
Much of Alphabet’s and Microsoft’s spending is directed toward semiconductor hardware, particularly Nvidia’s graphics processors. Microsoft indicated that about 75 % of its recent capital spending went to short‑lived assets such as CPUs and GPUs, up from roughly two‑thirds in the prior quarter, and highlighted the deployment of its first Nvidia Vera Rubin GPUs.
Nvidia’s fiscal 2027 second‑quarter revenue jumped 106 % year over year to $96.2 billion, and the company projected third‑quarter revenue near $108 billion, roughly 89 % above the comparable period a year earlier. Sequential growth has decelerated, falling from 22 % in fiscal Q3 2026 to a range of 18‑20 % in subsequent quarters, with the new outlook translating to about 12 % growth.
Despite the slowdown, analysts note that customers continue to expand budgets for AI compute, a trend reinforced by Alphabet’s commitment to increase spending in 2027. Alphabet’s CEO Sundar Pichai cited strong demand for the company’s own Tensor Processing Units (TPUs), suggesting that both Nvidia’s GPUs and Google’s TPUs can coexist in the expanding market.
Vertiv: Power and Cooling Provider Gains Momentum
Vertiv, a supplier of power and cooling solutions for data centers, posted its fastest growth of the year in the third quarter. Net sales rose 61 % year over year to $4.3 billion, with organic growth accelerating to 55 %, nearly triple the 18 % pace recorded in the second quarter. Adjusted operating margins improved each quarter, reaching 25.2 % in the latest period, while adjusted earnings per share climbed 78 % to $2.21.
The company reported that organic orders more than doubled year over year, though it announced it will stop publishing order data moving forward, reducing transparency for investors. Vertiv also raised its 2026 adjusted earnings forecast to a midpoint of $7.15 per share, up from $6.02 earlier in the year, and expects organic sales growth to outpace the market in 2027.
Vertiv’s stock has shown volatility, dropping 17 % on July 29 after a second‑quarter sales growth report of 24 % and comments about temporary supply‑chain constraints.
Valuation and Investment Perspective
Analysts project Nvidia to earn about $15.90 per share in fiscal 2028, giving the stock a price‑to‑earnings (P/E) ratio of roughly 14 times earnings at its current $215 price. Vertiv, trading near $243, carries a forward P/E of about 26 times expected 2027 earnings, nearly double Nvidia’s multiple.
Given the lower valuation multiple, many investors might prioritize Nvidia for a core holding, while treating Vertiv as a supplementary position with a smaller allocation. Both companies benefit directly from Alphabet’s escalating AI‑related capital program, positioning them as potential long‑term beneficiaries through 2030.
Norman Pearlstine is the Executive Editor and Co-Founder at News Raise. With over two decades of experience across financial journalism, corporate governance, and market analysis, Norman leads the editorial direction and ensures strict adherence to journalistic accuracy and ethics.
