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Alphabet Will Spend More On Google And Moonshots

February 3, 2016 - Written By Daniel Fuller

Alphabet made a few spending cuts last year, their first year operating as Alphabet rather than just as Google, and displayed somewhat of a cautious attitude, seemingly getting their bearings with the new company format. Side projects and money-focused endeavors got a bit more attention than usual, as well. Expenditures went down a whopping 41 percent in the last quarter of 2015, falling to $2.1 billion. This may sound fairly high, but do recall that this is the most valuable company in the world and has cash to burn, just not an infinite supply. Alphabet Chief Financial Officer Ruth Porat said in a conference on Monday that this pattern would not continue into 2016, which coincides with Google CEO Sundar Pichai’s plans to ramp up spending and generate more innovations and R&D accomplishments in 2016.

Part of the expanded spending involves a plan to expand Google Fiber into many more markets, including giving free Fiber service to the poor. Citigroup analyst Mark May expects Alphabet’s spending to shoot up to $12 billion for 2016 as a result, citing the high possible costs involved with expanding Fiber aggressively. More money is also going to be funneled into Google’s self-driving car business, since the space is poised to experience explosive growth once state and Federal lawmakers get the pertinent matters in order.

Moonshots, meanwhile, lost the company about $3.6 billion in 2015. A good few of them, however, will be receiving more funding, especially those that either fall into or bolster the core Google businesses of search and Android. According to Pichai, some of the biggest areas of Moonshot spending in 2016, aside from those related to core business, will be cloud computing and infrastructure as a service, artificial intelligence and virtual reality. Though the global market may be slowing down as China’s economic slump erodes the economies of its direct and indirect trade partners, Google does not show signs of slowing down this year. Although many companies will cut marketing before any other expense when times get tough, hurting Google’s search business, they have a decent sized pool of cash and clout to lay back on until the storm is over.