- Google wants to “deploy capital in a good way” among early AI startups
- Hidden gem projects cover areas such as data centers in space and quantum computing
- The company invests in third parties when internal opportunities are not mature enough
The CEO of Alphabet (Google’s parent company) has stated that now may be a good time to invest in new startups, as AI stimulates innovation across the board.
“I think now, with the shift in AI, there are more opportunities where we can deploy capital in a good way,” Sundar Pichai said in a conversation with Stripe co-founder John Collison.
Pichai noted that Google is now increasing its investments in AI startups, including major bets on companies like Anthropic, in a new trend of direct investments; So rather than relying exclusively on traditional venture capital routes, Google is making large direct investments from its own balance sheets, as are rival companies such as Microsoft and Nvidia.
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Rise of AI startups
Google could be set to make $100 billion or more from a decade-old 2015 bet on SpaceX, however recent increases in demand have introduced new challenges. For example, wafer capacity, the speed of permitting and building data centers, and the current memory shortage are expected to persist into 2026, 2027, and beyond.
Pichai explained that these limitations effectively create a limit to how quickly a single company can scale regardless of capital, so it’s best to consider AI investments as a longer-term bet.
For now, Google’s ongoing strategy is to invest every dollar possible where there is a high return on invested capital. Investing in third parties is also a reflection of Google’s own maturity, and Pichai acknowledges that when internal opportunities are not mature enough, the company invests in companies such as Anthropic, SpaceX and Stripe.
Anthropic has received billions in investments from Google; Since then, the startup launched a model that is so powerful that the public cannot access it, all packaged in a way that detects and rectifies serious software flaws.
The company also continues to invest in “hidden gem” projects, including in-space data centers, quantum computing, robotics, drone delivery and artificial intelligence-driven drug discovery; Starting small leaves room for potentially huge growth.
Looking ahead, Pichai’s comments make clear that AI is less about individual companies doing everything they can and more about focusing on individual strengths and investing where others might offer greater opportunities.
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