Google parent earnings beat projections amid plans to invest deeply in AI | Google
Google parent company Alphabet beat Wall Street expectations on Wednesday and plans a sharp increase in capital spending in 2026 as it continues to invest deeply in artificial intelligence infrastructure.
Alphabet on Wednesday reported profits of $34.5 billion in the recently ended quarter, as revenue from cloud computing rose 48%.
The company also projects spending between $175 billion and $185 billion this year. much higher above analysts’ expectations of roughly $115 billion.
Investors pressured Alphabet chief executive Sundar Pichai for a significant raise during his earnings call. In response, Pichai said, “Even as we increased our capacity, supply was constrained. Frankly, our Capital Expenditure this year is an eye towards the future.” “We are constantly doing long-term planning.” Pichai added that he expects Google “to spend the year in a supply-constrained manner.”
Anat Ashkenazi, Alphabet’s chief financial officer, described the ways Google is trying to free up capital. This includes building their own data centers and having an AI-powered tool “to enable us to do this in the most efficient way,” according to Ashkenazi known as A “coding rep” writes about half of the company’s code (before it’s reviewed by engineers) and uses AI across departments, even for smaller tasks like processing invoices.
“We see our AI investments and infrastructure driving revenue and growth overall,” Pichai said.
Pichai added that Alphabet’s annual revenue exceeded $400 billion for the first time.
The company reported revenue of $113.83 billion in the fourth quarter of 2025; this beat Wall Street estimates of $111.43 billion. Earnings per share (EPS) also beat Wall Street’s expectations: the company reported earnings per share of $2.82, compared to estimates of $2.63.
The report follows several months of good news for the company in the AI race.
The latest version of Gemini, released by Google in November, is at the forefront of the productive AI industry. created panic at rival OpenAI. stock of the alphabet increased by 3% When Google launched the model.
Later in January, Google and Apple announced the company will begin using Gemini to power AI features like Siri; Apple assistant has encountered before criticism Because it is not as advanced and accurate as its competitors. After the agreement, Google’s value increased to 4 trillion dollars and Google became the second most valuable company in the world.
Analysts say the multi-year deal is a big win For Google: the tech giant has outperformed rivals like OpenAI and gained access to Apple’s user base. 2.5 billion active devices.
“Gemini is becoming the artificial intelligence engine for the world’s most successful software companies,” Pichai said in a statement Wednesday.
Alphabet’s projected spending on AI infrastructure means its capital expenditure could nearly double this year. Stocks were volatile in after-hours trading as investors weighed increased spending against rising revenue and profits.
Like larger rivals Amazon Web Services and Microsoft’s Azure, Google Cloud is struggling with capacity constraints, and Pichai said the spending is necessary “to meet customer demand and take advantage of the growing opportunities ahead.”
But with major cloud companies collectively spending large sums of money building out their infrastructure, investors have become increasingly concerned about the returns on their AI investments. Last week, Meta increased its capital investment for AI development by 73% this year.
While the artificial intelligence arms race is heating up, Pichai said that Google’s Gemini artificial intelligence assistant application exceeded 750 million users per month, an increase of 100 million compared to November.
Driverless car section waymo It is working to integrate the AI model and Google Chrome browser It will also adapt more Gemini AI features.
Google is still dealing with scrutiny from lawmakers and regulators; The company has faced years of legal battles with US antitrust regulators over allegations it had installed a security system. illegal monopoly through online search and advertising. That fight flared up again this week as the Justice Department and several states appealed a landmark antitrust decision last year in which a judge imposed only modest restrictions on the company’s contracts. The federal government wanted tougher restrictions. Google executives did not discuss legal action on the earnings call.
