Alphabet, the parent company of Google, reported a remarkable profit of $34.5 billion for the recently concluded quarter, exceeding Wall Street’s expectations. This strong financial performance coincides with the company’s announcement of plans to significantly increase capital spending in 2026, particularly focused on artificial intelligence (AI) infrastructure.
In its earnings report released on Wednesday, Alphabet disclosed a 48% surge in revenue from cloud computing. For the upcoming year, the company forecasts capital expenditures between $175 billion and $185 billion, a substantial increase compared to analysts’ estimates of approximately $115 billion. “We’re seeing our AI investments and infrastructure drive revenue and growth across the board,” said Sundar Pichai, Alphabet’s Chief Executive Officer. He also noted that the company’s annual revenue has surpassed $400 billion for the first time.
For the fourth quarter of 2025, Alphabet reported revenue of $113.83 billion, which exceeded Wall Street forecasts of $111.43 billion. Earnings per share (EPS) also surpassed expectations, coming in at $2.82 against an estimate of $2.63. This positive earnings report follows several months of advancements for Alphabet in the competitive AI landscape.
Alphabet’s AI model, Gemini, which was introduced in November, has positioned the company as a leader in the generative AI sector. The release of Gemini has raised concerns for competitors like OpenAI, with Alphabet’s stock experiencing a 3% increase upon the model’s debut. In a significant partnership announced in January, Google and Apple revealed that Siri would begin utilizing Gemini for enhanced AI features, addressing past criticisms of Siri’s performance compared to other AI assistants. Following this agreement, Google’s valuation soared to $4 trillion, making it the second-most-valuable company globally.
In light of Alphabet’s ambitious plans, the projected spending on AI infrastructure could potentially double this year. Following the earnings announcement, shares experienced volatility in after-hours trading as investors assessed the implications of increased spending against the backdrop of rising revenue and profits. Pichai emphasized the necessity of these expenditures to meet customer demand and leverage the growing opportunities in the market.
Similar to larger competitors such as Amazon Web Services and Microsoft’s Azure, Google Cloud has faced capacity constraints. In response, the company is focusing on expanding its infrastructure. Investors are increasingly scrutinizing the return on investment from AI expenditures, particularly as major cloud providers ramp up their infrastructure developments. Recently, Meta also announced a significant increase of 73% in capital investment for AI development in the current year.
As the competition intensifies in the AI sector, Google’s Gemini AI assistant application has reportedly exceeded 750 million users per month, marking a 100 million increase since November. Alphabet’s self-driving car division, Waymo, is actively working on integrating the AI model into its operations. Additionally, Google plans to incorporate more Gemini AI features into its Chrome browser.
The financial results and future plans underscore Alphabet’s commitment to deepening its investment in AI technologies, positioning the company to capitalize on the burgeoning demand for advanced AI capabilities across various sectors.
