TLDR
- Alphabet delivered Q4 revenue of $113.8 billion, rising 18% year-over-year and exceeding $111.5 billion estimates, with EPS at $2.82 versus $2.64 expected.
- Google Cloud revenue jumped 48% to $17.7 billion with 30% margins, outperforming Microsoft Azure’s 39% growth rate in the same period.
- The company plans $175-$185 billion in 2026 capex, nearly doubling 2025’s $91.5 billion and shocking analysts expecting around $142 billion.
- J.P. Morgan lifted its price target to $395 while maintaining Overweight, despite projected 61% free cash flow decline to $29 billion.
- Gemini hit 750 million monthly users as Google Cloud backlog grew 55% sequentially to $240 billion in contracted future revenue.
Alphabet just posted earnings that crushed expectations across the board. The market’s reaction tells a different story.
Revenue reached $113.8 billion in Q4. That marks an 18% year-over-year jump and beats the $111.5 billion consensus estimate.
The company earned $2.82 per share. Wall Street had modeled $2.64.
Google Services showed accelerating momentum. Google Cloud emerged as the real star with $17.7 billion in quarterly revenue, up 48%.
That growth demolished Microsoft Azure’s 39% pace. Operating margins hit 30% in the cloud division, showing scale economics kicking in.
Search revenue grew 17% as fears about AI disruption proved overblown. The core business remains healthy and growing.
Gemini usage exploded to 750 million monthly active users. Engagement metrics per user climbed higher too.
Then came the capex bombshell that rattled investors.
Spending Surge Dominates Conversation
Alphabet’s 2025 capex totaled $91.5 billion. That aligned with the $91-$93 billion guidance provided earlier.
Management then dropped 2026 guidance of $175-$185 billion. That’s essentially double the prior year’s investment.
Analysts had already stretched estimates to $142 billion on the bullish end. Alphabet’s plans exceed that by more than $30 billion.
J.P. Morgan’s Doug Anmuth, ranked in the top 3% of analysts, called the increase a sign of “strength not weakness.”
Free cash flow will crater to $29 billion this year from higher levels. That’s a 61% drop year-over-year.
Depreciation expenses should rocket 73% as last year’s hardware purchases hit the books. Near-term profitability takes a hit.
The company holds $80 billion in net cash. That cushion helps fund the aggressive buildout without financial stress.
Management emphasized ongoing efficiency programs across engineering, server deployment, and custom chip development. Headcount growth remains disciplined.
Backlog Growth Validates Strategy
Google Cloud’s backlog surged 55% quarter-over-quarter to $240 billion. That represents locked-in future revenue from multi-year contracts.
Anmuth raised his price target from $385 to $395. That implies 22% upside from current trading levels.
He kept his Overweight rating intact. The analyst sees proven returns across Gemini adoption, Cloud growth, and Search expansion.
Google’s contracted backlog separates it from peers making similar infrastructure bets. Revenue visibility extends years into the future.
Twenty-five analysts rate the stock Buy while seven say Hold. The consensus lands at Strong Buy.
Average price targets sit at $376.63, pointing to 17% potential gains from here.
The company’s 2015 SpaceX investment keeps paying dividends. With SpaceX eyeing a $1.5 trillion IPO, that $900 million stake has multiplied tremendously.
Waymo robotaxi operations continue expanding geographically. The autonomous vehicle unit could spin out as a separate entity eventually.
Google Cloud now grows faster than any major competitor. Sustained execution at this pace would reshape cloud market share rankings.
Q4 proved AI tools enhance rather than replace Google’s search business. Revenue accelerated throughout 2025 instead of declining.
Alphabet reported these financial results on February 8, 2026, with Google Cloud backlog reaching $240 billion and revenue hitting $17.7 billion.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
