Alphabet exceeded Wall Street expectations for both earnings and revenue in its fourth-quarter results and said it plans to sharply increase spending on artificial intelligence in 2026.
The company reported earnings of $2.82 per share on revenue of $113.83 billion, beating analyst estimates on both counts. Revenue rose nearly 18% year over year, while net income climbed almost 30% to $34.46 billion. Despite the strong results, Alphabet shares fell as much as 3% in extended trading.
Alphabet said it expects capital expenditures in 2026 to reach between $175 billion and $185 billion, a level that would more than double its spending in 2025. Finance chief Anat Ashkenazi said the investment will focus largely on expanding AI computing capacity for Google DeepMind, meeting growing cloud demand, and improving user experience and advertiser returns across Google’s services.
Advertising revenue totaled $82.28 billion, up 13.5% from a year earlier. YouTube ad revenue rose nearly 9% to $11.38 billion, though it came in below analysts’ expectations. Ashkenazi noted that ad results faced tougher comparisons due to strong U.S. election-related spending in late 2024.
Google Cloud delivered one of the strongest performances, posting nearly 48% revenue growth year over year and exceeding expectations. Its backlog more than doubled from the previous year, reaching $240 billion, reflecting rising demand for AI-driven services.
CEO Sundar Pichai said Alphabet’s Gemini AI app now has more than 750 million monthly active users. He added that efficiency improvements helped cut Gemini’s serving costs by 78% over the past year.
Meanwhile, Alphabet’s Other Bets unit posted lower revenue and wider losses, driven in part by higher expenses at self-driving subsidiary Waymo, which continues to expand its autonomous ride services across major U.S. cities.
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