TLDR
- Alphabet delivers Q4 2025 earnings February 4 with Wall Street expecting $2.63 EPS and $111.3 billion revenue
- Google Cloud forecast to hit $16.2 billion in quarterly sales with margins jumping to 22.7% from 17.5%
- Shares have climbed 81% in six months after Gemini 3 AI models restored competitive position
- AI overviews help Google maintain nearly 90% search market share
- Analysts project $116 billion in 2026 capital expenditures for AI infrastructure expansion
Alphabet releases fourth quarter 2025 financial results Wednesday after market close. Wall Street consensus calls for $2.63 earnings per share on $111.3 billion revenue.
Those figures mark 23% earnings growth and 15% revenue expansion year-over-year. The tech giant has exceeded earnings estimates for nine consecutive quarters.
Cloud Unit Steals the Spotlight
Google Cloud takes center stage this earnings season. Analysts forecast $16.2 billion in quarterly sales, representing 35% annual growth.
The margin story looks even stronger. Operating margins are projected to expand to 22.7% versus 17.5% last year.
Cloud revenue benefits directly from AI infrastructure demand. Businesses need powerful computing resources to run AI workloads. Google provides that capacity through its data centers.
The company invested approximately $90 billion in capital spending throughout 2025. The bulk went toward expanding AI infrastructure capacity.
Wall Street estimates $116 billion in capex for 2026. That spending level matches rivals like Meta, which announced $115 billion to $135 billion for next year.
Search Dominance Continues
Google faced serious questions about search viability a year ago. ChatGPT’s emergence caught the company unprepared. Rival AI models looked superior.
The November Gemini 3 launch changed everything. Those models finally compete head-to-head with OpenAI and Anthropic offerings.
AI overviews transformed search results. The AI-generated summaries sit atop traditional search listings. That innovation helped preserve Google’s 90% market share.
Advertising generates roughly 75% of total revenue. Ad sales should increase 13% this quarter with search leading growth.
YouTube and display advertising maintain solid performance. The foundation remains stable.
Market Response and Analyst Views
Alphabet stock has surged 81% over the past six months. Year-over-year gains exceed 64%.
Roth MKM analyst Rohit Kulkarni recently boosted his price target to $365 from $310. He maintains a Buy recommendation.
Kulkarni highlights TPU chip partnerships and Waymo city launches as growth drivers. He expects FIFA World Cup, Winter Olympics, and midterm elections to support advertising demand in 2026.
Waymo recently secured $16 billion in funding at a $126 billion valuation. The autonomous driving division operates more than 2,500 vehicles. It remains America’s only paid robotaxi service without safety drivers.
Options market pricing suggests a 5.83% move after earnings. Analyst consensus shows Strong Buy with 22 Buy ratings against six Hold ratings.
Average price target sits at $355.76, implying 4.72% upside potential. Google Cloud is expected to generate $16.2 billion in fourth quarter revenue with operating margins reaching 22.7% as Alphabet continues aggressive AI infrastructure buildout.
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