Alphabet’s shares closed largely flat on Thursday after the company beat Wall Street’s expectations on earnings and revenue, with artificial intelligence spending projected to increase hugely this year.
The Google parent closed nearly 2% lower on Wednesday. After the bell, Alphabet reported fourth-quarter revenue of $113.83 billion, above the $111.43 billion estimate from analysts polled by LSEG.
Its Google Cloud division had $17.66 billion in revenue versus a forecast of $16.18 billion, according to StreetAccount. YouTube Advertising posted $11.38 billion in revenue versus the estimated $11.84 billion.
The tech giant said it would significantly increase its 2026 capital expenditure to between $175 billion and $185 billion — more than double its 2025 spend. A significant portion of capex spending would go toward investing in AI compute capacity for Google DeepMind.
What analysts are saying
Barclays analysts said in a note Thursday that Infrastructure, DeepMind and Waymo costs “weighed on overall Alphabet profitability,” and will continue to do so in 2026.
“Cloud’s growth is astonishing, measured by any metric: revenue, backlog, API tokens inferenced, enterprise adoption of Gemini. These metrics combined with DeepMind’s progress on the model side, starts to justify the 100% increase in capex in ’26,” they said.
“The AI story is getting better while Search is accelerating – that’s the most important take for GOOG,” they added.
Deutsche Bank analysts said in a note Thursday that Alphabet has “stunned the world” with its huge capex spending plan. “With tech in a current state of flux, it’s not clear whether that’s a good or a bad thing,” they wrote.
Correction: This story has been updated to correct that Alphabet shares were down on Thursday.
