Google Data Center Spending Continues to Soar

GOOG-CapEx-3Q-2013

Google's capital expenditures have climbed steadily from quarter to quarter over the past two years.

Google continues to invest heavily in its Internet infrastructure, recording a whopping $2.29 billion in capital expenditures in the third quarter of 2013, the company said Thursday. The spending is driven by a massive expansion of Google's global data center network, which represents perhaps the largest construction effort in the history of the data center industry.

The $2.29 billion spent in the third quarter was the company's second-largest quarterly CapEx investment ever, trailing only the
$2.5 billion total for the fourth quarter of 2010, when it spent $2 billion to purchase 111 8th Avenue in New York. Google has been steadily ramping up its spending in each of the last seven quarters, crossing the $1 billion per quarter mark late last year.

This quarter's huge number reflects the breadth of Google's server farm construction program. Here's a look at the data center expansions announced thus far in 2013:

But don't think Google is spending with abandon. The company remains focused on capital efficiency as well as energy efficiency. Each of the 2013 expansion projects has represented an additional phase at an existing campus where Google has already built at least one data center. Building multiple facilities at a single site can be cheaper than building in a new site, as basic infrastructure for power and connectivity is typically installed during the buildout of the first facility, leaving less work and expense in subsequent phases.

The third quarter spending pushes Google's total investment in its infrastructure past $23 billion.

A capital expenditure is an investment in a long-term asset, typically physical assets such as buildings or machinery. Google says the majority of its capital investments are for IT infrastructure, including data enters, servers, and networking equipment. In the past the company’s CapEx spending has closely tracked its data center construction projects, each of which requires between $200 million and $600 million in investment.