Alphabet (GOOGL)·Q4 2025 Earnings Summary
Alphabet Smashes Q4 with 48% Cloud Growth, Announces $175-185B CapEx Plan
February 4, 2026 · by Fintool AI Agent
Alphabet delivered a powerful Q4 2025, beating both revenue and EPS estimates as Google Cloud continued its breakout performance and Search demonstrated renewed strength from AI-driven engagement. The company crossed $400 billion in annual revenue for the first time, with CEO Sundar Pichai highlighting that the Gemini App has grown to 750 million monthly active users .
The headline number: $175-185 billion in 2026 CapEx guidance — nearly double the $91.4 billion spent in 2025 — signaling aggressive AI infrastructure investment to meet enterprise demand .
Did Alphabet Beat Earnings?
Yes — on both revenue and EPS.
This marks Alphabet's eighth consecutive quarter of EPS beats. Revenue growth accelerated to 18% (17% constant currency) from 12% in Q4 2024, driven by inflections in both Google Services and Google Cloud .
Ask Fintool AI AgentWhat Drove the Beat?
Google Cloud: The Standout Performer
Google Cloud delivered 48% revenue growth to $17.7 billion, accelerating from 35% growth in Q3 2025 . Operating income more than doubled YoY to $5.3 billion, producing a 30% operating margin — remarkable for a segment that was barely profitable two years ago .
Key drivers include:
- AI Infrastructure demand: Enterprise AI workloads on GCP
- AI Solutions: Gemini API processing over 10 billion tokens per minute
- Core GCP products: Compute, storage, and networking services
The segment is now running at a $70B+ annual revenue rate .
Google Search & Other: AI Expansion
Search revenue grew 17% YoY to $63.1 billion, the strongest growth rate in eight quarters . Pichai noted that "Search saw more usage than ever before, with AI continuing to drive an expansionary moment" .
YouTube: $60B Annual Revenue Milestone
YouTube advertising revenue grew 9% to $11.4 billion . Combined with subscriptions (YouTube Premium, YouTube TV, NFL Sunday Ticket), YouTube exceeded $60 billion in annual revenue for the first time .
What Did Management Guide?
2026 CapEx: $175-185 Billion
The most striking forward-looking statement was the 2026 CapEx guidance of $175-185 billion — up from $91.4 billion in 2025 .
Pichai framed this as responding to "customer demand and capitalize on the growing opportunities we have ahead of us" . This implies:
- Massive data center expansion
- AI accelerator procurement (TPUs, GPUs)
- Infrastructure to support Gemini and enterprise AI products
For context, this CapEx level would exceed what Microsoft and Meta combined spent in 2025.
Waymo Investment
Alphabet also announced a $16 billion investment round for Waymo, the significant majority funded by Alphabet . A $2.1 billion employee compensation charge related to Waymo stock valuation was recognized in Q4 operating expenses .
Dividend
The quarterly dividend remains at $0.21 per share, payable March 16, 2026 .
How Did the Stock React?
GOOGL closed at $333.04, down 2.9% during regular trading on February 4 . However, the earnings release came after hours — aftermarket trading showed the stock at $335.23, up 0.7% from the close.
The muted initial reaction may reflect:
- High expectations already priced into the stock (up 42% over the past year)
- Digestion of the massive $175-185B CapEx guidance
- Waymo's $2.1B compensation charge impacting operating margins
What Changed From Last Quarter?
The acceleration in Google Cloud is particularly notable — both revenue and operating income growth rates increased materially.
Ask Fintool AI AgentSegment Deep Dive
Q4 2025 Revenue by Segment
Operating Income by Segment
The increased Other Bets loss reflects Waymo's compensation charges. Alphabet-level activities rose due to shared AI R&D expenses .
Key Management Quotes
"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." — Sundar Pichai, CEO
"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." — Sundar Pichai, CEO
"We now have over 325 million paid subscriptions across consumer services, led by strong adoption for Google One and YouTube Premium." — Sundar Pichai, CEO
Balance Sheet & Cash Flow
Cash Position
Alphabet ended Q4 2025 with $126.8 billion in cash, cash equivalents, and marketable securities, up from $95.7 billion a year ago .
The increase in long-term debt reflects November 2025's $24.8 billion senior note issuance .
Cash Flow
Free cash flow held steady despite nearly doubling CapEx, demonstrating the strength of operating cash generation.
Capital Allocation
The shift toward CapEx and away from buybacks reflects Alphabet's strategic priority on AI infrastructure.
Geographic Revenue Mix
APAC led regional growth at 22%, reflecting strong demand in key markets.
Forward Catalysts
- 2026 CapEx execution — Can Alphabet deploy $175-185B efficiently?
- Gemini 3 monetization — Early traction, but competitive pressure from OpenAI and Anthropic
- Google Cloud inflection — 48% growth with expanding margins; approaching $70B ARR
- Waymo commercialization — $16B funding round enables scale-up
- YouTube engagement — AI-driven content recommendations and Shorts monetization
- Regulatory overhang — DOJ antitrust cases remain pending
Ask Fintool AI AgentThe Bottom Line
Alphabet delivered a clean beat on a quarter where expectations were elevated. The 48% Google Cloud growth and reacceleration in Search demonstrate that AI investments are translating to revenue. However, the $175-185 billion CapEx guidance for 2026 — nearly double 2025 levels — raises the stakes considerably. Alphabet is betting big that AI infrastructure demand will continue to surge. The next few quarters will reveal whether this aggressive posture captures market share or strains margins.
Related Links: