Google Parent Alphabet Tops $400 Billion in Annual Revenue as AI Spending Accelerates

 

MOUNTAIN VIEW, California — Alphabet Inc., the parent company of Google, reported annual revenue exceeding $400 billion for the first time, underscoring the resilience of its advertising and cloud businesses even as the company sharply increases spending on artificial intelligence and data-center infrastructure.

In its fourth-quarter and full-year earnings release, Alphabet said total revenue reached approximately $403 billion, up about 15% year-on-year, driven by continued growth in Google Search, YouTube advertising, and a rapidly expanding Google Cloud division.

Quarterly results showed revenue of $113.8 billion, while net profit rose to $34.5 billion, highlighting Alphabet’s ability to sustain strong margins despite mounting capital expenditures. Cloud revenue climbed 48% to $17.7 billion, reinforcing the unit’s position as one of the group’s primary growth engines. YouTube advertising revenue increased to $11.4 billion, compared with $10.5 billion a year earlier.

Chief Executive Sundar Pichai said investments in AI-powered products are boosting engagement across the company’s platforms, with AI Mode queries and enhanced search features driving higher user activity. Alphabet disclosed that its Gemini AI platform now counts around 750 million users, while the company has surpassed 325 million paid subscriptions across its services.

Looking ahead, Alphabet plans to significantly raise investment levels. The company said capital expenditures are expected to reach between $175 billion and $185 billion in 2026, nearly double current spending, as it builds out AI infrastructure and expands global data-center capacity. The outlook weighed slightly on investor sentiment, with shares slipping just over one percent in after-hours trading.

The earnings report followed news that Waymo, Alphabet’s autonomous driving unit, raised $16 billion in fresh funding, valuing the business at roughly $126 billion. Analysts said the financing highlights Alphabet’s willingness to support long-term bets even as near-term spending intensifies.

Market watchers also pointed to regulatory relief as a stabilizing factor. A U.S. court ruling last year that spared Chrome from forced divestiture removed a major overhang, allowing Alphabet to focus on monetising AI across its core products.

Despite concerns over rising costs, analysts broadly agreed that Alphabet’s cash-generating advertising business gives it unusual flexibility to fund large-scale AI investments while maintaining profitability.

Frequently Asked Questions (FAQs)

Why did Alphabet’s revenue exceed $400 billion for the first time?
Growth was driven by advertising, Google Cloud, and YouTube, alongside increased engagement from AI-enhanced products.

How fast is Google Cloud growing?
Cloud revenue rose 48% year-on-year, making it one of Alphabet’s fastest-growing segments.

How much is Alphabet planning to spend on AI and infrastructure?
The company expects capital expenditures of $175–$185 billion in 2026, nearly doubling current investment levels.

What is the role of Gemini AI in Alphabet’s strategy?
Gemini AI has reached around 750 million users and is being integrated across Search, Cloud, and consumer products.

How did markets react to the earnings report?
Alphabet shares fell slightly, reflecting investor caution over higher spending despite strong revenue growth.

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