Alphabet, the parent company of Google, is set to make one of its most aggressive capital spending moves yet — allocating $85 billion in 2025 toward infrastructure, with two-thirds dedicated to high-performance servers for training and running large language models. The increase, up from earlier estimates of $75 billion, underscores the tech giant’s intent to dominate the artificial intelligence (AI) race.
Beyond infrastructure, Alphabet is also reshaping its investment portfolio through its growth equity arm, CapitalG, which manages $7 billion in assets. The fund has historically backed high-profile tech firms — including 16 that have gone public — but is now streamlining its holdings, cutting from 40 public company positions in Q1 to 36 in Q2.
One notable exit is CrowdStrike, a leading cybersecurity player that CapitalG first invested in during 2015. After holding over 1.3 million shares at the end of 2023, the fund began gradually reducing its stake, citing valuation concerns. The complete divestment coincided with Alphabet’s own strategic shift — agreeing to acquire Wiz, a rapidly growing cloud security company, for $32 billion.
Why Wiz? A Cloud Security Play with AI Potential
Google Cloud — Alphabet’s cloud services division — remains the third-largest player in the global market, trailing Amazon Web Services and Microsoft Azure. While Google Cloud is expanding, its $54.5 billion run rate still lags Azure’s $75 billion, with Microsoft growing faster.
Integrating Wiz’s security solutions could enhance Google Cloud’s value proposition, particularly for industries where security is mission-critical, such as finance and government. The acquisition would also give Wiz access to Alphabet’s vast capital reserves, enabling deeper investment in AI-based threat detection and prevention.
However, Alphabet faces a strategic balancing act. While embedding Wiz tightly into Google Cloud could improve stickiness, it risks undermining Wiz’s neutrality — a factor that may deter customers who prefer multi-cloud security solutions.
The CrowdStrike Factor
CrowdStrike, once a major CapitalG holding, has faced challenges since a significant outage in mid-2024 that impacted its margins. While revenue growth remains strong at 42% year-over-year, and nearly half its customers now use six or more of its security modules, its valuation — trading at roughly 27 times sales — has raised investor caution. Alphabet’s Wiz deal could intensify competition in cloud security, potentially pressuring CrowdStrike’s market position.
The Bigger Picture
Alphabet’s spending spree, combined with targeted acquisitions like Wiz, signals a broader strategy: build unmatched AI capabilities, secure cloud dominance, and strengthen its competitive moat. With $95 billion in cash reserves, the company is positioned to make bold moves that other tech players may hesitate to pursue.
If regulators approve the Wiz deal, it could accelerate Google Cloud’s growth and open new market segments. For investors, Alphabet’s forward P/E below 20 makes it an intriguing proposition — blending robust AI investment, strategic acquisitions, and a growing cloud footprint into a long-term growth story.
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