TLDR
- Alphabet reported Q4 revenue of $113.8 billion, up 18% year-over-year, beating the $111.5 billion estimate, with EPS of $2.82 versus $2.64 expected.
- Google Cloud revenue surged 48% to $17.7 billion with operating margin hitting 30%, outpacing Microsoft Azure’s 39% growth.
- The company announced 2026 capex plans of $175-$185 billion, roughly double 2025’s $91.5 billion spend, well above Street estimates of $142 billion.
- J.P. Morgan raised its price target from $385 to $395, maintaining an Overweight rating despite near-term free cash flow pressure from elevated spending.
- Gemini reached 750 million monthly active users while Google Cloud’s backlog jumped 55% quarter-over-quarter to $240 billion.
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Alphabet just dropped Q4 earnings that beat on every major metric. But investors sent shares lower anyway.
Alphabet Inc., GOOGL
The company reported total revenue of $113.8 billion for the quarter. That’s an 18% jump from last year and topped the Street’s $111.5 billion estimate.
Earnings per share came in at $2.82. Analysts had penciled in $2.64.
Google Services drove faster growth than expected. Google Cloud stole the show with $17.7 billion in revenue, up 48% year-over-year.
That cloud growth rate crushed Microsoft Azure’s 39% increase. Google Cloud’s operating margin hit 30%, proving the segment isn’t just growing fast but printing money too.
Search revenue picked up steam with 17% growth. The AI-will-kill-Google narrative looks dead in the water.
Gemini usage exploded to 750 million monthly active users. Engagement per user climbed too.
But here’s what spooked Wall Street.
Capex Concerns Dominate Headlines
Alphabet spent $91.5 billion on capex in 2025. That matched guidance of $91-$93 billion.
For 2026, the company plans to spend $175-$185 billion. That’s roughly double last year’s number.
Wall Street had already pushed estimates to $142 billion on the high end. Alphabet blew past that by a wide margin.
J.P. Morgan analyst Doug Anmuth says the spending surge comes from “a position of strength.” He ranks in the top 3% of Street stock experts.
The analyst points to Google Cloud’s backlog jumping 55% quarter-over-quarter to $240 billion. That’s real demand backing up the investment thesis.
Depreciation should spike 73% this year as all that 2025 spending hits the books. Free cash flow will take a beating, with Anmuth modeling $29 billion for 2026, down 61% from last year.
The company still holds $80 billion in net cash. That cushion matters when you’re doubling capex.
Management stressed efficiency efforts across tech, engineering, server deployment, and TPU enhancements. Headcount discipline continues too.
Cloud Momentum Justifies Investment Case
Anmuth raised his price target from $385 to $395. That implies 22% upside from current levels.
He kept his Overweight rating on the stock. The analyst says clear returns are showing up across Gemini, Cloud, and Search.
Google’s multi-year backlog separates it from peers. That’s contracted revenue sitting on the books.
The broader Street maintains a Strong Buy consensus. Twenty-five analysts rate it Buy with seven Holds.
The average price target sits at $376.63, pointing to 17% gains ahead.
Alphabet’s 2015 investment in SpaceX looks prescient now. The $900 million stake has ballooned in value with SpaceX targeting a $1.5 trillion IPO valuation.
Waymo continues expanding its robotaxi operations. That business keeps growing and could eventually stand alone.
Google Cloud posted the fastest growth among major cloud platforms. If that 48% pace holds, the company might challenge for cloud computing dominance.
The Q4 print proved Google isn’t getting disrupted by AI chatbots. Revenue accelerated throughout 2025 instead of declining.
Alphabet reported these results on February 8, 2026, with Google Cloud revenue reaching $17.7 billion and the backlog climbing to $240 billion.
