Alphabet (NASDAQ: GOOGL ) (NASDAQ: GOOG ) surprised investors when the company set a capital expenditure (capex) budget of between $175 billion and $185 billion for 2026 when it reported its fourth-quarter results. This is a huge increase over the $91 billion in capex spent in 2025.
About 60% of its spending goes to servers and about 40% to long-term assets such as data centers and networking equipment. Inside the server, much of that spending will go toward semiconductor chips. Meanwhile, networking equipment, such as Ethernet switches and fiber optic cables, buildings and power substations, are included in long-term assets.
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The biggest winner from this spending will likely be Broadcom (NASDAQ: AVGO).
Broadcom is a co-developer of Alphabet’s tensor processing units (TPUs), which Alphabet uses to run its internal AI workloads. While Alphabet provides designs, Broadcom supplies critical intellectual property and manages relationships with foundries, e.g Taiwan Semiconductor ManufacturingTo turn designs into physical chips that can be manufactured at scale. Broadcom, meanwhile, books revenue for each chip it produces. It is estimated to be around $13,000. While more, this one costs less than half Nvidiaof graphics processing units (GPUs).
Meanwhile, Broadcom is also a leader in networking. Its Tomahawk Ethernet switches are the industry standard for large-scale data centers. It also offers high-performance fiber optical interconnect solutions and other components required by AI data centers. Broadcom’s networking portfolio also carries higher gross margins than its custom AI application-specific integrated circuit (ASIC) chip business.
based on Citigroup According to estimates, Alphabet contributed about $13 billion to Broadcom’s ASIC revenue in fiscal 2025. This would account for approximately 17% of Alphabet’s capital expenditures over the same period (note that they are fiscal year mismatches). Increase the percentage given Alphabet’s push toward TPUs over GPUs, and its TPU revenue from Alphabet could potentially double or triple next year. It should also see a huge increase in networking revenue.
Meanwhile, Broadcom received a $21 billion order from Anthropic for TPUs for AI workloads with Google Cloud to be delivered this year. While Broadcom generated just $63.9 billion in revenue in fiscal 2026, its total revenue could double this fiscal year.
