Alphabet profits soar 30%, driven by Gemini surpassing 750 million users
Alphabet delivered a strong fourth-quarter performance, beating expectations on both earnings and revenue. Despite the solid results, the company’s shares slipped as much as 3% in extended trading, reflecting investor focus on rising costs and future spending plans.
For the quarter, Alphabet reported revenue reached $113.83 billion, surpassing the $111.43 billion forecast. Overall revenue grew nearly 18% year over year, and net income rose almost 30% to $34.46 billion, highlighting the company’s continued profitability at scale.
Advertising remained Alphabet’s largest revenue driver, generating $82.28 billion, up 13.5% from the same period last year. YouTube advertising revenue increased nearly 9% to $11.38 billion, though it fell short of analyst expectations.
Google Cloud was a standout performer, delivering revenue of $17.66 billion, well ahead of forecasts and representing nearly 48% year-over-year growth. The cloud division, which houses much of Alphabet’s AI infrastructure and services, saw its backlog climb sharply, rising 55% sequentially and more than doubling year over year to $240 billion. This growth underscores strong enterprise demand for AI-powered cloud services.
Looking ahead, Alphabet announced plans to significantly increase capital expenditures in 2026, projecting between $175 billion and $185 billion, more than double its 2025 investment at the high end. Management said the spending will focus on expanding AI compute capacity, supporting cloud customer demand, improving user experiences, and increasing advertiser returns across Google’s platforms.
On the AI front, the company highlighted rapid adoption of its Gemini AI app, which now boasts more than 750 million monthly active users, up from 650 million in the previous quarter. Executives emphasized efficiency gains, noting significant reductions in AI serving costs through optimizations and improved utilization.
Meanwhile, Alphabet’s “Other Bets” segment continued to struggle financially. Revenue declined to $370 million, while losses widened sharply, driven in part by a large stock-based compensation charge at its autonomous driving unit, Waymo. Despite the losses, the business reached an operational milestone, completing 15 million rides across several major U.S. cities by the end of 2025 and expanding into a new market in early 2026.
