DeepMind CEO called it wartime when ChatGPT hit 100 million users and Google went all out

• Demis Hassabis declared AI competition “wartime” in 2023, when Google (GOOGL) and Microsoft (MSFT) had fallen behind OpenAI, pushing both companies to transform their research and engineering operations into comprehensive competitive efforts.

• Google backs up its wartime stance with a CapEx forecast of between $175 billion and $185 billion by 2026 (nearly double the $91.45 billion spent in fiscal 2025), while Microsoft’s OpenAI partnership is locked in through 2032 with $250 billion in contracted Azure services, both making massive bets on cloud dominance. AI.

• For long-term investors, the critical question is whether these companies are building transformative AI for scientific advancements or simply to amass power, a distinction that will separate generational winners from those chasing quarterly headlines.

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The AI ​​arms race has been underway since ChatGPT arrived in late 2022, and a quote from that time keeps coming to me when I look where Alphabet (NASDAQ:GOOGL) and microsoft (NASDAQ:MSFT) are holding today.

When author Sebastian Malaby visited DeepMind CEO Demis Hassabis in late April 2023, Hassabis said: “We are in wartime. OpenAI and Microsoft have literally parked the tanks on the grass.”

READ: The analyst who called NVIDIA in 2010 just named its top 10 AI stocks

Google had been caught off guard and Hassabis knew it. When OpenAI launched ChatGPT in November 2022, internal bets on user adoption ranged from a few thousand to tens of thousands. They prepared server capacity for 100,000 users. In 5 days it reached 1 million users. In two months it reached 100 million users, making it the fastest growing consumer app in history.

His response was immediate. It shifted DeepMind from peacetime operations to wartime operations: it reduced blue-sky research, stopped publishing mission-critical research that competitors could copy, and shifted focus from pure science to engineering. Google then merged Google Brain and DeepMind, consolidating its AI efforts behind a single product called Gemini.

A DeepMind researcher said: “My view is that we probably needed to be in second place for a while just to light a fire under our own asses. There’s nothing like public humiliation to spur action.”

The wartime posture is visible in the numbers. Google’s CapEx forecast for 2026 is between $175 billion and $185 billion, compared to $91.45 billion in fiscal year 2025. This is a company that is betting its balance sheet on AI.

The returns are coming. Google Cloud reported $17.66 billion in revenue in Q4 2025, up 48% year-over-year, and operating income more than doubled. The Gemini app reached 750 million monthly active users in Q4 2025, up from 650 million in Q3 2025. GOOGL stock is up 120% over the past year.

Microsoft’s wartime stance is reflected in its partnership with OpenAI. Microsoft has approximately a 27% stake in OpenAI valued at approximately $135 billion, with OpenAI contracted for a $250 billion increase in Azure services and intellectual property rights extended through 2032. Azure grew 39% year-over-year in the second quarter of fiscal 2026, and Microsoft’s remaining business performance obligation increased 110% year-over-year to $625 billion. MSFT stock is up 6% over the past year, though it’s down 22% as valuation compression weighs on the stock.

The deeper question for long-term investors is one that Hassabis himself raised: whether competitors are creating AGI for scientific reasons or to accumulate power. Steve Jobs made the same observation: “The older I get, the more convinced I am that motives make a difference.” For investors with a retirement horizon, the distinction between a company that builds generational products versus one that builds to win a news cycle is the kind of signal worth tracking in both names.

Hassabis called it wartime in 2023. Capital commitments from both Google and Microsoft confirm that the war is still going on, and the financials suggest that both are fighting to win it.

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