Google’s $190 Billion Infrastructure Splurge Creates a Cloud Juggernaut That Even the EU Can’t Slow

Alphabet shares hit all-time highs as Google Cloud revenue jumps 63% to $20B, but EU regulatory risks loom. Analysts raise targets amid AI infrastructure boom.

Alphabet is living a double life. On one side, the stock is touching fresh all-time highs, the cloud business is minting money at an unprecedented clip, and analysts are scrambling to raise their price targets. On the other, Brussels is circling with a regulatory stick that could land another multibillion-euro fine on the search giant. For now, the market is betting that the growth story outweighs the legal headaches.

The numbers tell the tale. Alphabet’s shares hit a new peak of €342.45 on Thursday, extending a 12-month rally that has delivered a staggering 155% gain. The stock has added roughly 26% since the start of the year alone. The catalyst is a cloud business that has suddenly become the company’s most powerful growth engine.

Cloud Crosses the $20 Billion Threshold

Google Cloud’s first-quarter revenue jumped 63% to $20 billion — the first time the segment has crossed that milestone. Even more striking, the operating margin in the division more than doubled from 18% to 34%, giving investors concrete proof that the cloud operation is no longer a money-losing experiment. The backlog of signed contracts nearly doubled to over $460 billion, providing a multiyear revenue runway that most competitors would envy.

That backlog is precisely what caught the attention of Mizuho analyst Lloyd Walmsley. He raised his price target on Alphabet from $420 to $460, maintaining an “Outperform” rating. His thesis is straightforward: Wall Street is systematically underestimating how much money Google Cloud can generate over the next two years. Mizuho projects cloud revenue growth of 70% year-over-year by the end of 2026, well above the consensus estimate of 58%. On earnings per share, the bank forecasts $11.81 for 2026 and $14.04 for 2027, both above the broader analyst consensus.

Walmsley’s optimism rests partly on Google’s proprietary Tensor Processing Units. These custom AI chips, he argues, can deliver margins at least as high as the traditional cloud business — but with the added benefit of a largely capital-light model. Of the 61 analysts covering Alphabet on LSEG, 53 rate the stock a buy.

A $190 Billion Bet on AI Infrastructure

Sustaining that cloud growth requires capital on a scale that is almost hard to fathom. Alphabet plans to spend up to $190 billion this year on infrastructure, more than it spent in the previous three years combined. The vast majority of that money is going into data centers purpose-built for artificial intelligence workloads.

To fund the buildout, the company just raised nearly $17 billion in the bond market, including the largest euro-denominated corporate bond in history. Investor demand far exceeded supply, and S&P assigned the debt its strong AA+ rating.

The spending isn’t letting up. For 2026, capital expenditures are projected at roughly $185 billion, with further increases penciled in for 2027. The message from management is clear: Alphabet is going all-in on AI infrastructure, and it believes the returns will justify the outlay.

Washington Cooperation vs. Brussels Confrontation

While Alphabet is spending freely, it is also navigating a regulatory landscape that looks very different on opposite sides of the Atlantic.

In the United States, the company has positioned itself as a cooperative partner. Alongside Microsoft and xAI, Google signed an agreement with the Commerce Department’s Center for AI Standards and Innovation (CAISI). Under the deal, CAISI will get early access to new AI models before they are released to the public, allowing the government to assess national security risks and societal impacts — sometimes with reduced safety filters to stress-test the systems. The arrangement fulfills a commitment made by the Trump administration in July 2025 to collaborate with industry on AI safety. For Alphabet, it is a strategic move to be seen as a responsible actor at a time when global AI oversight is tightening.

The situation in Europe is far more adversarial. The European Commission is investigating whether Google’s search practices violate the Digital Markets Act. Publishers have accused the company of systematically downgrading their news content when it includes material from commercial partners. If the EU finds a violation, it can impose fines of up to 10% of Alphabet’s global annual revenue. The company has already paid roughly €9.5 billion in penalties in Europe, and it is eager to avoid adding to that tally.

Google has offered concessions to Brussels, proposing changes to how it handles search results. Interested parties have until next week to submit feedback. If the negotiations fail, EU competition authorities are expected to take a hard line.

What’s Next

The next major milestone for Alphabet is Google I/O on May 19, where management will lay out its AI strategy for the coming year. By then, the first signals from Brussels should also be clearer. If the search concessions are accepted, the regulatory cloud lifts. If not, Alphabet could be staring at another multibillion-euro fine just as its cloud business is hitting its stride.

For now, the market is focused on the growth. And with a $460 billion cloud backlog, a proprietary chip advantage, and a record-breaking investment program, the growth story has plenty of momentum — even if the lawyers in Brussels are working overtime.