** Alphabet GOOGL.O on Wednesday cited massive demand for its cloud computing services as it hiked its capital spending plans for the year to about $85 billion from $75 billion earlier and predicted a further increase next year

** Google Cloud's sales jumped nearly 32%, beating expectations of a 26.5% rise and driving overall revenue growth

** Shares of GOOGL up ~2.7% at $195.44 in premarket trading

AI IS THE ENGINE, CLOUD IS THE FUEL

** J.P.Morgan ("overweight," PT: $232) says the combination of robust AI-driven demand and a growing pipeline of cloud deals positions Google Cloud as an increasingly central pillar of the bull case for Alphabet going forward

** Morgan Stanley ("overweight," PT: $210) sees continued progress on Google’s AI and other product launches, which will be key to boosting investor confidence

** Piper Sandler ("overweight," PT: $220) sees potential for better margins, but says rising capital spending is weighing on the free cash flow outlook

** Market is still largely unfazed by the higher investment outgo though, given strong momentum in the cloud business, growing opportunities with Waymo, and accelerating adoption of Gemini - Piper

** Citizens ("market outperform," PT: $225) remains cautious about Google's ability to maintain strong performance in 2026 and beyond, as ChatGPT continues to take a growing share of search queries, while potential antitrust penalties could disrupt its distribution through Chrome and Apple AAPL.O

(Reporting by Akriti Shah in Bengaluru)

((akriti.shah@thomsonreuters.com))