The company claims its new experimental models surpass those of China’s DeepSeek
The tech giant Google announced this Tuesday that it plans to invest $75 billion in capital expenditures in 2025, aimed at developing technical infrastructure related to artificial intelligence (AI), such as servers and data centers, as it needs more “capacity” to meet demand.
“We’ve seen very strong demand for our AI products in the fourth quarter and ended the year with more demand than available capacity, so we’re in a very tight supply and demand situation, working hard to activate more capacity,” said Alphabet CEO Sundar Pichai on Tuesday.
The executive stated that its new experimental AI models outperform those of Chinese company DeepSeek and that it will increase capital expenditures to absorb the “strong demand.”
In the earnings call with analysts, the executive explained that Alphabet’s AI model, called Gemini, stands out in terms of “cost, performance, and latency,” and “leads the Pareto frontier,” an economic concept referring to the efficiency equilibrium point.
“I’d say our (Gemini) 2.0 Flash and 2.0 Flash Thinking models are among the most efficient out there, including when compared to DeepSeek’s V3 and R1,” said Pichai, who nonetheless congratulated the “tremendous team” at DeepSeek for doing a “very good job.”
In the last quarter of 2024, Google Cloud—the cloud service that incorporates AI—posted revenues of $11.955 billion, up 30% year-over-year. However, this figure represents slower growth compared to previous quarters, which executives attributed to limitations in meeting demand.
Pichai also predicted that tech companies are increasing spending on AI model inference and said he expects that “reasoning models,” which can use logic to reach conclusions, will further accelerate development.
“That’s part of the reason why we’re so excited about the opportunity of AI. We know we can drive extraordinary use cases because the real cost of using AI is going to keep coming down, making more examples feasible. The opportunity space is huge.”
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