Google must double AI serving capacity every 6 months to meet demand

Google ‘s AI infrastructure boss told employees that the company has to double its serving capacity every six months in order to meet demand for artificial intelligence services.

At an all-hands meeting on Nov. 6, Amin Vahdat, a vice president at Google Cloud, gave a presentation, viewed by CNBC, titled “AI Infrastructure,” which included a slide on “AI compute demand.” The slide said, “Now we must double every 6 months…. the next 1000x in 4-5 years.”

“The competition in AI infrastructure is the most critical and also the most expensive part of the AI race,” Vahdat said at the meeting, where Alphabet CEO Sundar Pichai and CFO Anat Ashkenazi also took questions from employees.

The presentation was delivered a week after Alphabet reported better-than-expected third-quarter results and raised its capital expenditures forecast for the second time this year, to a range of $91 billion to $93 billion, followed by a “significant increase” in 2026. Hyperscaler peers Microsoft, Amazon and Meta also boosted their capex guidance, and the four companies now expect to collectively spend more than $380 billion this year.

Google’s “job is of course to build this infrastructure but it’s not to outspend the competition, necessarily,” Vahdat said. “We’re going to spend a lot,” he said, adding that the real goal is to provide infrastructure that is far “more reliable, more performant and more scalable than what’s available anywhere else.”

In addition to infrastructure build-outs, Vahdat said Google bolsters capacity with more efficient models and through its custom silicon. Last week, Google announced the public launch of its seventh generation Tensor Processing Unit called Ironwood, which the company says is nearly 30 times more power efficient than its first Cloud TPU from 2018.

Vahdat said the company has a big advantage with DeepMind, which has research on what AI models can look like in future years.

Google needs to “be able to deliver 1,000 times more capability, compute, storage networking for essentially the same cost and increasingly, the same power, the same energy level,” Vahdat said. “It won’t be easy but through collaboration and co-design, we’re going to get there.”

Pichai told employees at the meeting that 2026 will be “intense,” citing AI competition and the pressure to meet cloud and compute demand.

He also answered a question about a potential AI bubble, a topic that’s gained resonance across Silicon Valley and Wall Street of late as investors have grown skeptical about whether the trillions of dollars in anticipated spend in the coming years is justified.

The employee question that he read aloud asked, “Amid significant Al investments and market talk of a potential Al bubble burst, how are we thinking about ensuring long-term sustainability and profitability if the Al market doesn’t mature as expected?”

Pichai acknowledged the concerns.

“It’s a great question. It’s been definitely in the zeitgeist, people are talking about it,” Pichai said. 

He then reiterated a point he’s made in the past about the risks of not investing aggressively enough, and highlighted Google’s cloud business, which just recorded 34% annual revenue growth to more than $15 billion in the quarter. Its backlog reached $155 billion.

“I think it’s always difficult during these moments because the risk of underinvesting is pretty high,” Pichai said. “I actually think for how extraordinary the cloud numbers were, those numbers would have been much better if we had more compute.”

He said the company follows a disciplined approach, pointing to the strength of the underlying businesses and company’s balance sheet.

“We are better positioned to withstand, you know, misses, than other companies,” Pichai said.

Looking ahead to next year, Pichai told employees, “there will be no doubt ups and downs.”

“It’s a very competitive moment so, you can’t rest on your laurels,” he said. “We have a lot of hard work ahead but again, I think we are well positioned through this moment.”

Google declined to comment.

The bubble conversation picked up steam ahead of Nvidia‘s quarterly earnings report on Wednesday. Shares of big AI winners like CoreWeave and Oracle have gotten hammered, continuing a monthlong slide. In an interview with the BBC earlier this week, Pichai said that there are “elements of irrationality” in the market and that if a bubble were to burst, “no company is going to be immune, including us.”

Nvidia CEO Jensen Huang began his commentary on the chipmaker’s earnings call on Wednesday by rejecting the premise of an AI bubble, saying that, “We see something very different.” Nvidia, which counts Google as a major customer, reported 62% revenue growth, topping estimates, and issued stronger-than-expected guidance for the fourth quarter.

Still, the markets sank on Thursday, with Nvidia shares sliding 3.2%, pushing the Nasdaq down 2.2%. Alphabet’s stock fell 1.2%.

Earlier this week, Google launched its newest AI model, Gemini 3, which the company says will provide better answers to more complex questions compared with prior models. Google is in a race with artificial intelligence companies, most notably OpenAI, to get its advanced AI tools in the hands of as many people as possible.

However, Pichai said capacity supply is the bottleneck. He gave the example of video generation tool Veo, which the company upgraded last month.

“When Veo launched, how exciting it was,” Pichai said. “If we could’ve given it to more people in the Gemini app, I think we would have gotten more users but we just couldn’t because we are at a compute constraint.”

Another highly rated employee question read at the meeting said, “Capex is accelerating at a rate significantly faster than our operating income growth,” and asked what the company’s strategy is for “healthy free cash flow” over the next 18 to 24 months.

Ashkenazi, who joined Google as finance chief last year, said the company has a number of prospects, including the potential to bring more customers from physical data centers into the cloud.

Broadly, she said, “The opportunity in front of us is significant and we can’t miss that momentum.”

Clarification: This story is updated to more precisely reflect Amin Vahdat’s comments on the need to meet demand by both increasing capacity and improving efficiency.

WATCH: Google releases Gemini 3