Ignore market hidden worries, Alphabet Inc. Class C (GOOGL.US) throws in 40 billion dollars to expand AI infrastructure in Texas.

Alphabet Inc. Class C (GOOGL.US) announced on Friday that it plans to invest $40 billion in three new data centers in Texas, aimed at boosting the state's artificial intelligence (AI) computing power. Currently, Texas has attracted investments of billions of dollars from competitors such as OpenAI and Anthropic PBC. Alphabet Inc. Class C stated in a declaration that the related investments will be completed by 2027. One data center will be located in Armstrong World Industries, Inc. County in the northern plains region of Texas, and the other two will be near Abilene in West Texas, in Haskell County. One of the data centers in Haskell County will be accompanied by a newly built CECEP Solar Energy and battery storage facility to alleviate the impact on the power grid. Alphabet Inc. Class C CEO Sundar Pichai stated at an event near Dallas, "This investment will create thousands of jobs in Texas, provide skills training for college students and electrical apprentices, and accelerate the state's energy accessibility plan." Alphabet Inc. Class C currently operates two data centers in Dallas. With relatively low energy prices, vast land resources, and government support for AI infrastructure development, Texas is becoming a popular location for data center construction. In announcing the latest plans, Alphabet Inc. Class C emphasized its commitment to "introducing new energy sources to the grid, bearing operational costs, and supporting community energy efficiency programs." The company also announced that through funding from Google.org's AI Opportunity Fund, an electrical training program will significantly increase the number of electrical apprentices in Texas. "Texas will become the core Hub Group, Inc. of Alphabet Inc. Class C's AI data centers," both Texas Governor Greg Abbott and Pichai said at the event they attended together, "businesses that operate here know that Texas is always moving forward at the speed of business development." Boosted by this news, Alphabet Inc. Class C's stock price rose over 4% in after-hours trading on Friday. Big Players Battle in Texas Texas has also attracted commitments from other companies. Earlier this week, Anthropic announced a $50 billion investment to build data centers across the United States, including in New York and Texas, with Texas's ample land reserves and relatively low energy costs being key advantages. The "Stargate" project, supported by OpenAI, Oracle Corporation, and SoftBank Group, with its first data center under construction in Abilene, Texas, executives have revealed plans to expand further in the state. Meta Platforms is also building a new gigawatt-level data center in Texas. For reference, 1 gigawatt of power can meet the electricity needs of 750,000 households simultaneously. Earlier this month, Microsoft Corporation signed a nearly $10 billion agreement to secure computing capacity in Texas for the next five years. CareTrust REIT IncFermi Inc., founded by former Texas Governor Rick Perry (former Energy Secretary in the first term of the Trump administration), plans to build four nuclear reactors in Texas specifically for private data center campus use. Concerns Behind the Investment Boom However, as data centers rapidly expand in Texas and throughout the United States, investors are starting to worry: large-scale spending plans may far exceed revenue growth achieved through AI services. Indeed, commitments of tens of billions of dollars are not uncommon for Alphabet Inc. Class C. The company expects capital expenditures to exceed $90 billion this year alone, a significant increase from previous estimates, with most of the funds being used for servers, custom chips, and new data center construction to support its AI and cloud computing business. But in just the past two months, Alphabet Inc. Class C has announced several major investments: plans to invest $15 billion in constructing AI infrastructure hubs in southern India; a commitment to invest $6.4 billion in compute resources and operations projects in Germany; and over $6.5 billion to be invested in the UK to drive the local AI industry. This investment extravaganza not only showcases Alphabet Inc. Class C's ambition to go beyond traditional search advertising business and achieve global expansion but also poses a serious test to whether it can quickly convert the heavily invested AI infrastructure into the returns that investors expect.