TMTPOST -- Nvidia Corporation stock on Thursday rose more than 1.7% to settle at $173.74, setting a new close record. Shares of the leading artificial intelligence (AI) chip company extended their gains after its major customer Alphabet Inc. boosted the capital spending plans this year, strengthening investors’ confidence in strong AI demand.

Credit：Google DeepMind

Alphabet in February has said it expects to spend around $75 billion in capital expenditure (Capex) this year as it continues to build out its AI offerings. That was already above the $58.84 billion Wall Street expected at the time when the company released its earnings for the fourth quarter of this year. 

The Google parent on Wednesday raised its annual Capex outlook by $10 billion to meet the demand of its cloud offerings. The updated guidance of $85 billion was a massive beat compared with analysts anticipated $73.31 billion.

Alphabet CEO Sundar Pichai commented the financial results for the second quarter that the company recorded robust growth as AI is positively impacting every part of the business, driving strong momentum. “With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures in 2025 to approximately $85 billion and are excited by the opportunity ahead,” he said in a statement.

The lifted forecast comes as demand for cloud services surges across the tech industry as AI services increase in popularity. As a result, companies are doubling down on infrastructure to keep pace with demand and are planning multi-year buildouts of data centers. Nvidia, as a dominant advanced AI chip maker, these years have been a major winner amid the AI frenzy. Capex became the most closely watched figure for Nvidia investors since it is largely being propelled by spending on data centers to power AI technology. 

Pichai in the statement attributed the double-digit revenue growth of Google Search to AI application, and touted strong growth in revenues, backlog and profitability of Google Could. Cloud is the business of tech giants that now is most evidently benefiting from generative AI applications. Pichai said the quarter ended June 30 saw robust growth across his company as it is“leading at the frontier AI and shipping at an incredible pace.”  

Alphabet revenue for the second quarter jumped 14% year-over-year (YoY) to $96.43 billion, beating Wall Street expectation of $93.97 billion. The diluted earnings per share (EPS) for the quarter soared 22.2% YoY to $2.31, smashing analysts’ estimates of $2.01.

Both of Alphabet’s core business digital advertising and the cloud computing business, which is deemed as the future growth engine, accelerated for the June quarter and delivered stronger-than expected growth of revenue.

Google advertising brought $71.34 billion for the second quarter with a 10% YoY increase, up from a 8.5% YoY rise three months ago. Analysts had anticipated ad revenue to be $69.71 billion. In the segment, Google Search maintained its beat while YouTube ad reversed after a miss by sales for the March quarter.

Revenue from Google Search and Other gained 12% YoY to $54.19 billion, versus analysts projected $52.86 billion. YouTube ad recorded revenue of $9.8 billion with a 13% YoY increase, while analysts had expected YouTube contributed $9.56 billion.

Revenue from Google Cloud refreshed quarterly record, jumping 32% YoY to $13.62 billion for the second quarter. That was better than analysts estimated $13.14 billion. The increase in revenue was also ahead of a 28% growth for the previous quarter.