Amin Vahdat, Google’s vice president of machine learning, systems and cloud AI, holds up TPU version 4 at Google’s headquarters in Mountain View, California, on July 23, 2024.
mark ganley
Google The head of AI infrastructure told employees that to meet demand for artificial intelligence services, the company needs to double its service delivery capacity every six months.
During the Nov. 6 all-hands meeting, Google Cloud Vice President Amin Vahdat gave a presentation titled “AI Infrastructure” that was viewed by CNBC, which included a slide on “The Demands of AI Computing.” The slide said, “From now on, you have to double every 6 months. Next is 1000x in 4-5 years.”
“Competition in AI infrastructure is the most important and most expensive part of the AI race,” Vahadat said at the conference, where Alphabet CEO Sundar Pichai and CFO Anat Ashkenazi also fielded questions from employees.
The presentation came a week after Alphabet reported better-than-expected third-quarter results and raised its capital spending forecast for the second time this year to a range of $91 billion to $93 billion, followed by “significant increases” in 2026. microsoft, Amazon and meta Capital spending forecasts have also been raised, with the four companies expected to collectively spend more than $380 billion this year.
Google’s job is “to build this infrastructure, of course, but not necessarily to outspend the competition,” Vahadat said. “We’re going to spend a lot of money,” he said, adding that the real goal is to provide an infrastructure that is “much more reliable, performant, and scalable than anything available elsewhere.”
In addition to building infrastructure, Google is increasing its capabilities through more efficient models and custom silicon, Vahadat said. Last week, Google announced the general availability of its 7th generation Tensor Processing Unit, called Ironwood. The company says it’s nearly 30 times more power efficient than its first Cloud TPU in 2018.
Vahdat said the company has a big advantage with DeepMind, which is conducting research into what future AI models will look like.
Google “needs to be able to deliver 1,000 times more functionality, compute and storage networking for essentially the same cost, and even the same power, same energy level,” Vahadat said. “It won’t be easy, but we will get there through collaboration and co-design.”
Alphabet Inc. Chief Executive Officer Sundar Pichai during the Bloomberg Tech Conference on Wednesday, June 4, 2025 in San Francisco, California, USA.
David Paul Morris | Bloomberg | Getty Images
Pichai told employees at the conference that 2026 will be “fierce” due to competition in AI and pressure to meet cloud and computing demands.
He also answered questions about a potential AI bubble. The AI bubble is a topic that has been reverberating in Silicon Valley and across Wall Street lately, as investors grow skeptical about whether the trillions of dollars in spending expected over the next few years are justified.
The employee’s question that he read out was, “With large amounts of aluminum investment being made and the possibility of an aluminum bubble bursting in the market, what are your thoughts on ensuring long-term sustainability and profitability if the aluminum market does not mature as expected?”
Pichai acknowledged the concerns.
“That’s a great question. This is definitely in the zeitgeist and people are talking about it,” Pichai said.
He then reiterated a point he’s made in the past about the risks of not investing aggressively enough, highlighting Google’s cloud business, which just posted a 34% annual revenue increase to more than $15 billion in the quarter. Its backlog reached $155 billion.
“I think there are always challenges in times like this because the risk of underinvestment is very high,” Pichai said. “In fact, given how impressive the cloud numbers were, I think these numbers would have been even better if we had more computing power.”
He said the company follows a disciplined approach and pointed to the strength of its underlying business and the company’s balance sheet.
“We are better positioned to withstand failure than other companies,” Pichai said.
market anxiety
Looking ahead to next year, Pichai told employees, “There will definitely be ups and downs.”
“These are very competitive times, so we can’t rest on our laurels,” he said. “We have a lot of hard work ahead of us, but again, I think we’re in a good position at the moment.”
Google declined to comment.
Bubble conversation gained momentum ahead of time NvidiaWednesday’s quarterly earnings report. Here are the big AI winners: coreweave and oracle The market has been hit hard and has been in a slump for a month. In an interview with the BBC earlier this week, Pichai said there were “elements of irrationality” in the market and that “no company, including us, will be exempt” if the bubble bursts.
Nvidia CEO Jensen Huang dismissed the premise of an AI bubble during the chipmaker’s earnings call Wednesday, beginning with a statement: “We’re looking at something completely different.” Nvidia, which counts Google as a major customer, reported stronger-than-expected 62% revenue growth and issued stronger-than-expected guidance for the fourth quarter.
Still, the market was lower on Thursday, with Nvidia stock down 3.2% and the Nasdaq down 2.2%. Alphabet stock fell 1.2%.
Earlier this week, Google announced its latest AI model, Gemini 3, which the company says provides better answers to more complex questions compared to previous models. Google is competing with artificial intelligence companies, especially OpenAI, to get its advanced AI tools into the hands of as many people as possible.
But Pichai said the supply of production capacity was a bottleneck. He cited the example of Veo, a video generation tool the company upgraded last month.
“I was really excited when Veo launched,” Pichai said. “If we could have reached more people with the Gemini app, we would have gotten more users, but we couldn’t do that due to computing constraints.”
Another top employee question read at the meeting said, “Capex is accelerating significantly faster than operating income growth,” and asked what the company’s strategy is for “healthy free cash flow” over the next 18 to 24 months.
Ashkenazy, who joined Google last year as head of finance, said the company has many prospects, including the potential to bring more customers from physical data centers to the cloud.
Broadly speaking, she said, “The opportunity before us is significant and we cannot afford to let the momentum slip away.”
Description: This story has been updated to more accurately reflect Amin Vahdat’s comments about the need to meet demand both by increasing capacity and increasing efficiency.
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