Google's $185 Billion AI Bet Has a Railroad Problem

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Today, we look at Google’s AI infra bet.

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The take: Sundar Pichai is selling the same AI spending he called irrational three months ago — and using 19th-century infrastructure as the receipt.

What happened: At the India AI Impact Summit on 18 February, Pichai compared Alphabet's record $175–185 billion 2026 capital spending plan to the US railroad and highway buildouts.

Why it matters: That figure doubles last year's spend, and some analysts now expect Alphabet's free cash flow to crater 90% in a single year.

What to watch: Whether the $240 billion Google Cloud backlog converts to real revenue before the next earnings call in late April.

Railroads also bankrupted 89 of America's 364 rail companies in a single panic. Someone get Pichai a history book that includes Chapter 2.

Background: Bank of America (BofA) polled 190 fund managers overseeing $512 billion between 6 and 12 February.

The quote: Chief Investment Strategist Michael Hartnett flagged that a record 35% of managers now say corporations are "overinvesting." That's the highest reading in 20 years. Another 25% named an AI bubble the top tail risk to markets.

Timing: Pichai's railroad pitch in Delhi landed one day after this survey dropped. The trip was planned weeks ahead. But the optics aren't: he's defending the biggest corporate spending bet in history, the day after Wall Street's loudest scepticism signal.

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In November, Pichai told the BBC the AI boom had "elements of irrationality" and warned no company was immune.

Three months later, he's in Delhi, comparing the same spending to the Eisenhower Highway System.

To be fair, his position has always been "the tech is transformative, but the cycle carries risk."

What shifted isn't the stance.

It's the emphasis, and the stage he chose to deliver it from.

Delhi wasn't a neutral venue. Pichai used the trip to announce a $15 billion AI hub in Vizag — built with Adani and Airtel — plus new subsea cables and training programmes.

That's a $185 billion global spend pitched from a country where Google wants to look like an infrastructure partner.

Not a company under earnings pressure.

Cloud backlog doubled year-on-year.

Q4 revenue?

Up 48%. And Gemini just crossed 750 million users. None of that is fake.

But the spending guidance blew past Wall Street's $119.5 billion estimate by over $60 billion.

Alphabet issued $20 billion in bonds to cover the difference. Nobody's arguing that foundational infrastructure doesn't pay off in the long run.

Pichai knows that better than most.

What he left out of the Delhi pitch is that the 1870s railroad investors got wiped out before the freight arrived.

Pro: Cloud backlog doubled to $240 billion — that's demand, and underbuilding now hands the market to competitors.

Con: Free cash flow may drop 90% in one year, and the funding structure — $20 billion in fresh bonds — suggests the pace is outrunning the balance sheet.

Our read: Nobody disputes that the tech works. The question is whether the CEO who warned of irrationality in November should be the one asking you to trust the timeline.

Bank of America Global Fund Manager Survey — February 2026

Record 35% of managers say corporations are overinvesting. Cash levels at 3.4% — a level that has preceded market drops every time it's appeared in the last 20 years. The clearest snapshot of where institutional money thinks this boom is heading. (Note: the full BofA survey is paywalled; this is the best available public summary.)

$650 billion: four companies' 2026 AI spending. More than Belgium's entire economic output. — BofA FMS / company filings

Alphabet shares fall as $20B bond sale ignites capex concerns — Century bonds to fund AI. Yes, really. [Report]

Pichai outlines Google's India AI hub and subsea cable push — $15 billion Vizag data centre plus new undersea cables. The geopolitics are as loud as the spend. [Report]

India AI Summit: subsidised GPUs at ₹65/hour — India is pricing GPU access at a quarter of the global rate. That changes who builds what. [Analysis]

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