oogle and OpenAI might be in for a showdown.
Amid its debut of Gemini 3, Google’s most powerful model yet on its “path to AGI,” the search giant is showing no signs of slowing down. The company’s head of AI infrastructure told employees in a recent all-hands meeting that Google needs to double its compute capacity every six months until the end of the decade.
“The competition in AI infrastructure is the most critical and also the most expensive part of the AI race,” Amin Vahdat, a vice president at Google Cloud, reportedly told employees. And the company isn’t afraid to shell out the cash:
- Early last week, Google committed $40 billion through 2027 to building out data centers in Texas, the latest in a string of multibillion-dollar AI infrastructure investments throughout the US, including Iowa, South Carolina and Arkansas.
- Google forecasted capital expenditures to sit anywhere between $91 and $93 billion for 2025 in its recent earnings call, largely going towards data centers.
Google seems to be basking in the limelight: Its parent company, Alphabet, surpassed Microsoft in market capitalization for the first time since 2018.
And OpenAI might be freaked out. In a memo to staff last month, reported by The Information late last week, OpenAI CEO Sam Altman told employees that Google’s progress could “create some temporary economic headwinds for our company,” cautioning employees that “expect(s) the vibes out there to be rough for a bit.”
OpenAI has been subject to substantial scrutiny in recent months. As it throws upwards of $1 trillion at historic AI infrastructure buildouts, it’s facing pressure to deliver on significant profit promises. Some in the industry are already expecting failure: At the Cerebral Valley AI Conference last weekend, an informal survey of 300 attendees voted Perplexity and OpenAI as most likely to flop.
“OpenAI may have large revenues, but is running very high costs and is entirely dependent on this ‘AI bubble,’” Thomas Randall, research director at Info-Tech Research Group, told The Deep View. “Given the diversification hyperscalers have made, I’m not sure OpenAI would be saved – instead, you would expect vultures.”