Google CEO Sundar Pichai gestures to the crowd during Google’s annual I/O developers conference in Mountain View, California on May 20, 2025.
Camille Cohen | Afp | Getty Images
Alphabet beat on the top and bottom lines in its fourth-quarter earnings report on Wednesday, and said it expects to significantly increase spending on artificial intelligence in 2026.
The stock fell as much as 3% in extended trading.
Here’s how the company did, compared with estimates from analysts polled by LSEG:
- Earnings per share: $2.82 vs. $2.63 estimated
- Revenue: $113.83 billion vs. $111.43 billion estimated
Wall Street was also watching several other numbers in the report:
- Google Cloud: $17.66 billion vs. $16.18 billion, according to StreetAccount
- YouTube advertising: $11.38 billion vs. $11.84 billion, according to StreetAccount
- Traffic acquisition costs: $16.59 billion vs. $16.20 billion, according to StreetAccount
Alphabet said it expects 2026 capital expenditures to be in the range of $175 billion to $185 billion. The top end of that forecast would be more than double its 2025 spend. The company said in October that it expected “a significant increase” to capex in 2026.
The company’s capex spend will go toward investing in AI compute capacity for Google DeepMind and to meet “significant cloud customer demand as well as strategic investments in other bets,” Alphabet finance chief Anat Ashkenazi told analysts on a call Wednesday. She added that it would be used to “improve the user experience and drive higher advertiser ROI in Google services.”
The company saw revenue increase almost 18% year over year. Net income came in at $34.46 billion, up almost 30% compared to the year prior.
Advertising revenue came in at $82.28 billion, up 13.5% from a year ago. Revenue for YouTube ads increased almost 9% to $11.38 billion, but it fell short of analysts’ expectations of $11.84 billion.
Ashkenazi said “advertising results were negatively affected from the lapping of the strong spend on U.S. election in the fourth quarter of 2024.”
Google Cloud beat Wall Street’s expectations, recording a nearly 48% increase in revenue from a year ago. Google’s Cloud unit houses most of the company’s AI services and products.
That business’s backlog increased 55%, more than doubling year-over-year and reaching $240 billion at the end of the fourth quarter, said Ashkenazi.
Alphabet and Google CEO Sundar Pichai said on the call Wednesday that its Gemini AI app now has more than 750 million monthly active users, up from 650 million monthly active users last quarter.
“As we scale, we are getting dramatically more efficient,” Pichai said. “We were able to lower Gemini serving unit costs by 78% over 2025 through model optimizations, efficiency and utilization improvements.”
Other Bets, which includes the company’s life sciences unit Verily and self-driving car unit Waymo, reported revenue of $370 million during the quarter, down 7.5% from a year ago. Alphabet reported Other Bets’ loss of $3.61 billion, a year-over-year increase of more than 200%.
Waymo took a $2.1 billion stock-based compensation charge for the quarter, as it raised a new funding round at a $16 billion valuation. The majority of the charge was reflected in expenses for research and development, Ashkenazi said.
The self-driving wing of Alphabet ended 2025 having served 15 million trips in five major U.S. markets, including Austin, Texas, Atlanta, Los Angeles, Phoenix and the San Francisco Bay Area. In January, Waymo began operating its service in Miami.
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