Alphabet (Google) Image by Markus Mainka via Shutterstock
The artificial intelligence (AI) boom continues to fuel one of the biggest spending cycles the technology sector has ever seen, and Alphabet (GOOGL) is showing no signs of easing off the accelerator.
The Google parent has once again increased its 2026 capital spending forecast to $195 billion to $205 billion, up from its earlier outlook of $180 billion to $190 billion, with most of that investment directed toward expanding AI infrastructure.
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While investors became cautious after free cash flow turned negative last quarter, the higher spending reinforced that demand for AI computing power continues to outpace supply. This news is expected to benefit Google suppliers Lumentum Holdings (LITE) and Celestica (CLS).
Lumentum is benefiting from rising demand for the optical networking components that move massive volumes of data across AI data centers. Meanwhile, Celestica supplies the advanced electronics manufacturing and networking infrastructure that hyperscale customers need to support their expanding AI deployments.
Not every AI supplier shared in the optimism. Broadcom (AVGO) holds concerns that it could lose some tensor processing unit business to MediaTek, even though Morgan Stanley (MS) recently described Broadcom as a “core AI winner.”
The market’s reaction shows investors are becoming more selective. As Google commits even more capital to AI, Lumentum and Celestica appear especially well positioned to benefit from the company’s next phase of infrastructure expansion.
Stock #1: Lumentum Holdings
Based in San Jose, California, Lumentum develops advanced optical and photonic technologies that power communications networks and a wide range of industrial applications.
With a market cap of $64.9 billion, Lumentum’s portfolio spans high-performance laser systems used in semiconductor manufacturing, solar production, display technologies, electric vehicles (EVs),…
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