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Alphabet says capacity limits held back Google Cloud revenue
The article says Alphabet reported $35.7 billion in capex in Q1 and raised its full-year forecast to $180 billion to $190 billion because demand exceeded supply.
Alphabet CEO Sundar Pichai said Google Cloud revenue fell short of potential because capacity constraints prevented the company from serving all waiting customers, according to Yahoo Finance. The outlet also points to internal competition for GPUs as engineers are required to use AI to generate code, which strains infrastructure already used to deliver enterprise services.
Yahoo Finance cites a Google Cloud backlog of $462 billion that nearly doubled in one quarter, describing it as more than 10 times the unit’s annual revenue and suggesting most deals convert within 24 months. Despite the large backlog, the core issue is not demand, the article says, but the ability to produce enough computing power.
The article also highlights Alphabet’s AI spending plans and recent capex pace. In Q4 2025, the company guided that capital expenditures would reach $175 billion to $185 billion in the year, but the piece notes it later reported $35.7 billion in capex during Q1 and raised its full-year forecast to $180 billion to $190 billion.
Yahoo Finance frames the shift as a move from an AI software race to an infrastructure buildout, where chips, data centers, and electricity are the limiting factors. It argues that Alphabet’s spending is aimed at meeting existing customer demand rather than waiting for new customers to arrive.