Alphabet CEO Sundar Pichai says 'AI shift' makes this a great time to invest in new start-ups

• Google wants to "deploy capital in a good way" among early AI startups
• Hidden gem projects cover areas like data centers in space and quantum computing
• The company invests in third parties when internal opportunities aren't mature enough

The CEO of Alphabet (parent company to Google) has declared now may be a great time to invest in new start-ups, as AI spurs innovation across the board.

"I think now with the AI shift, there are more opportunities on which we can deploy capital in a good way," Sundar Pichai said in a conversation with Stripe co-founder John Collison.

Pichai noted Google is now increasing its investments in AI startups, including placing major bets on firms like Anthropic, in a new trend of direct investments - so rather than relying purely on traditional venture capital routes, Google is marking large direct investments from its own balance sheets, as are rival companies like Microsoft and Nvidia.

AI startup boom

Google might be poised to make $100 billion or more from a decade-old 2015 bet on SpaceX, however recent surges in demand have introduced new challenges. For example, wafer capacity, the speed of permitting and building data centers and ongoing memory shortages are all expected to persist into 2026, 2027 and beyond.

Pichai explained these constraints effectively create a ceiling on how fast any single company can scale regardless of capital, thus AI investments are best seen as a longer-term bet.

For now, Google's continued strategy is to invest every dollar possible where there is high return on invested capital. Investing in third parties is also a reflection on Google's own maturity, with Pichai acknowledging that when internal opportunities are not mature enough, the company invests in the likes of Anthropic, SpaceX and Stripe.

Anthropic has been the recipient of billions in Google investments – the startup has since gone on to launch a model that's so powerful it can't be accessed by the public, all packaged up in a way to detect and rectify severe software flaws.

The company also continues to invest in "hidden gem" projects, including data centers in space, quantum computing, robotics, drone delivery and AI-driven drug discovery – starting small leaves room for potentially huge growth.

Looking ahead, Pichai's comments make it clear that AI is less about individual companies going all-in and more about focusing on individual strengths and investing where others might offer bigger opportunities.

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