Alphabet exceeded Wall Street’s expectations in the fourth quarter, reporting strong revenue growth driven by its Google Cloud division, but the tech giant’s aggressive investment plans for 2026 are giving investors pause. The company, which replaced Google Inc. as the publicly-traded entity in 2015 [[1]], plans to spend between $175 and $185 billion this year-more than double its previous outlay-primarily on artificial intelligence and cloud infrastructure. This surge in spending comes amid broader concerns about profitability in the tech sector, as companies race to capitalize on the AI boom. The market reacted to the news wiht a slight dip in after-hours trading, signaling investor caution.
Alphabet’s fourth-quarter earnings and revenue exceeded analyst expectations, though the company’s shares dipped in after-hours trading. The market reaction suggests investor concern over the tech giant’s ambitious spending plans for the year, which project a doubling of last year’s already substantial outlays. The news comes as investors continue to weigh growth prospects against rising costs across the tech sector.
The company reported earnings per share of $2.82, compared to an expected $2.63, and revenue reached $113.83 billion against a predicted $111.43 billion.
Year-over-year, revenue increased nearly 18 percent, while net income rose to $34.46 billion, representing a growth of approximately 30 percent.
Google Cloud demonstrated particularly strong performance: revenue jumped 48 percent year-over-year to exceed $17.6 billion. The segment’s order backlog grew by 55 percent in a single quarter, and more than doubled year-over-year, reaching $240 billion.
YouTube advertising revenue, however, fell short of expectations: bringing in $11.38 billion, below the anticipated $11.84 billion. According to Chief Financial Officer Anat Ashkenazi, this was partly due to the elevated advertising spend during the U.S. presidential election campaign a year prior.
Alphabet announced that it plans to invest $175–185 billion in 2026, which, at the high end of that range, would be more than double its spending last year.
The majority of these resources will be allocated to expanding artificial intelligence computing capacity, developing Google DeepMind, and further strengthening its cloud services.
CEO Sundar Pichai stated that the Gemini AI application now has 750 million monthly active users, up from 650 million in the previous quarter. He added that the company has successfully reduced Gemini’s operating costs by 78 percent over the past year.
The “Other Bets” segment, which encompasses experimental projects, generated $370 million in revenue and a loss of $3.61 billion. The latter figure was significantly impacted by Waymo, the self-driving car unit, which recorded $2.1 billion in stock-based compensation expense related to a recent funding round valuing the company at $16 billion.
Alphabet’s stock price fell 0.4 percent in after-hours trading.
A stock image for illustrative purposes. Image source: Getty Images
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