GOOG stock rises as Google’s Gemini AI drives Alphabet to $113.8 billion in Q4 revenue — here’s how
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Alphabet, the parent company of Google, continues to ride a wave of success as its artificial intelligence initiative, Gemini, outpaces competitors and boosts core business performance. The tech giant reported $113.8 billion in revenue for the quarter ending December 2025, an 18% increase year over year, while quarterly profits surged 30% to $34.5 billion — exceeding Wall Street expectations.
The earnings milestone marks a continued rebound for Google after early stumbles in AI development, with Gemini now enhancing YouTube recommendations, driving search traffic, and providing concise answers to queries. The company’s annual revenue surpassed $400 billion for the first time, putting Alphabet alongside Apple and Amazon in the elite group of trillion-dollar-plus revenue tech firms.
AI Growth Powers Google Cloud and YouTube
Google Cloud, a central hub for AI services and products, generated $17.66 billion, outperforming analyst forecasts of $16.18 billion. The unit’s robust growth reflects strong adoption of AI tools across enterprise clients. Meanwhile, YouTube advertising revenue rose nearly 9% to $11.38 billion, slightly below analyst expectations of $11.84 billion, indicating continued resilience in the platform’s ad business.
Gemini AI, Alphabet’s flagship system, now boasts over 750 million monthly active users, up from 650 million in the previous quarter. CEO Sundar Pichai highlighted that efficiency improvements and model optimizations reduced Gemini’s serving unit costs by 78% over 2025, showcasing the company’s focus on scaling AI while controlling costs.
Strategic Investments in AI Data Centers
The earnings call also underscored Alphabet’s commitment to expanding AI infrastructure. The company plans to invest $175 billion to $185 billion in capital expenditures in 2026, nearly doubling its 2025 spend of $90 billion. These funds are earmarked for new AI data centers across the U.S., ensuring Gemini and other AI products have wide distribution and computing capacity.
For comparison, competitors Meta and Microsoft announced plans to spend roughly $100 billion each on AI infrastructure this year. While Meta’s stock rose on revenue growth, Microsoft shares dipped after reporting modest AI gains despite heavy investment. Alphabet’s strong earnings suggest its AI strategy is delivering measurable returns.
Other Business Segments
Beyond AI, Alphabet reported that Other Bets, including Waymo and life sciences unit Verily, generated $370 million in revenue, a 7.5% decline from the prior year. Losses widened to $3.61 billion, more than double the previous year, largely due to Waymo’s $2.1 billion employee compensation charge tied to a $16 billion funding round.
Waymo, however, expanded operations, completing 15 million trips across five major U.S. markets — including Austin, Atlanta, Los Angeles, Phoenix, and the San Francisco Bay Area — and launched service in Miami in January.
Investor Reactions and Market Context
Despite exceeding earnings expectations, Alphabet shares dipped slightly in after-hours trading, though the stock has gained over $600 billion in market value over the past three months, reaching $4.02 trillion. Analysts continue to focus on Alphabet’s ability to balance heavy AI investment with profitability, a critical concern amid the intensifying Silicon Valley AI arms race.
Advertising revenue for the quarter totaled $82.28 billion, up 13.5% year over year, reinforcing the company’s dominance in search and digital ads even as AI takes a larger role in driving user engagement.
Pichai emphasized that AI is no longer just a technical experiment but a core growth engine for Google and Alphabet. “As we scale, we are getting dramatically more efficient,” he said. “Gemini is transforming how users interact with our platforms while fueling growth across our businesses.”