Alphabet (NASDAQ:GOOG) delivered quarterly results that exceeded analyst expectations on both earnings and revenue, while outlining a 2026 capital expenditure plan that significantly outpaced market projections.
Despite the strong performance, Alphabet shares traded lower in U.S. premarket activity on Thursday following volatile movements during extended trading hours.
The results arrive during a period of heightened scrutiny across technology stocks, particularly companies heavily involved in artificial intelligence. Investors have recently rotated away from several software firms amid concerns over AI disruption, stretched valuations and rising investment requirements, all of which have pressured broader market sentiment.
Like other large technology companies, Alphabet has committed substantial resources toward expanding its AI capabilities, allocating significant funding for data centres, semiconductor infrastructure and AI-driven platforms and models.
The company said it expects capital spending to reach between $175 billion and $185 billion in 2026, marking a sharp increase from 2025 levels and well above the consensus estimate of $119.50 billion.
“There are only 59 other companies in the S&P 500 that Alphabet couldn’t buy with the $180 billion in CapEx it plans for this year,” Bespoke Investment Group noted on X (formerly Twitter).
Alphabet’s financial update follows a strong period of share price performance relative to its Magnificent Seven peers. The company’s Class A shares surged 65.3% during 2025, outperforming the other members of the group. The stock has gained a further 8.5% year-to-date, continuing to outpace both its large-cap technology rivals and the S&P 500 benchmark.
Momentum strengthened further in the final quarter of 2025, when Alphabet’s Class A shares climbed 28.8%, driven largely by investor enthusiasm surrounding the launch of its Gemini AI model and a partnership with Apple to support AI capabilities within Apple devices, including the Siri voice assistant.
“It was a tremendous quarter for Alphabet and annual revenues exceeded $400 billion for the first time. The launch of Gemini 3 was a major milestone and we have great momentum,” chief executive Sundar Pichai said in a statement.
“Our first party models, like Gemini, now process over 10 billion tokens per minute via direct API use by our customers, and the Gemini App has grown to over 750 million monthly active users. Search saw more usage than ever before, with AI continuing to drive an expansionary moment,” Pichai added.
For the fourth quarter of 2025, Alphabet reported earnings of $2.82 per share on revenue of $113.83 billion, compared with analyst expectations of $2.64 per share on revenue of $111.12 billion. The company had already achieved its first $100 billion revenue quarter in the third quarter of 2025.
Operating income for the quarter increased 16% year-on-year to $35.93 billion.
“Alphabet’s growth remains tremendous for a company their size, or any company for that matter. The are perfectly positioned to capitalize on the AI revolution and the surge of interest in this space across our planet,” Christopher Ballard, managing director at Check Capital Management, told Investing.com.
“They passed $400 billion of total revenues for the first time, and they announced plans to spend around $180 billion in 2026 to increase their chances to continue these colossal totals,” Ballard said.
Much of investor attention remained focused on Alphabet’s Google Cloud division, which houses the company’s AI infrastructure and generative AI products. The segment recorded revenue growth of 48% year-on-year to $17.66 billion, reinforcing its status as one of Alphabet’s fastest-expanding businesses.
Meanwhile, Alphabet’s core Google Services division — which includes advertising, Android, Chrome, Google Maps, Search and YouTube — continued to deliver strong performance. Revenue in this segment rose 14% year-on-year to $95.86 billion.
“Their growth in Google search increased 17% at a time when their critics have alluded to the notion that ‘search is dead’. There are strong indications that the AI prompts users input create more questions which lead to searches on Google’s browser, which in turn keeps advertisements and revenues growing. Google’s engine is truly a powerful one,” Ballard added.
Alphabet’s Other Bets segment, which includes ventures such as autonomous transport, healthcare technologies and internet connectivity services, generated $370 million in revenue during the quarter, representing a 7.5% decline from the previous year.