Alphabet, the parent company of Google, announced strong quarterly earnings on Wednesday, with revenue rising sharply as the company pours substantial funds into AI-enhanced cloud computing services.
The technology company reported an 18 percent year-on-year revenue increase for the quarter. For the full year, Alphabet’s total revenue exceeded $400 billion for the first time since its founding by Larry Page and Sergey Brin in 1998.
However, Alphabet stated that it plans to nearly double its capital investments this year to keep pace in the intense AI technology competition across Silicon Valley.
The company projects capital expenditures of between $175 billion and $185 billion in 2026, roughly twice the amount spent in 2025, in order to satisfy growing customer demand for AI-related products.
Despite heavy spending on computing infrastructure to support AI, demand continues to exceed available supply, according to Chief Executive Sundar Pichai.
“We’ve been supply constrained even as we’ve been ramping up our capacity,” Pichai said on an earnings call.
Alphabet’s shares fell slightly more than one percent in after-hours trading.
Google’s Gemini AI experienced rapid growth, reaching 750 million monthly users by the end of the year, an increase of 100 million from the previous quarter.
“We expect Google to overtake OpenAI this year for the top spot in AI,” said Emarketer analyst Nate Elliott.
Alphabet generated $113.8 billion in revenue during the final three months of 2025, driven primarily by its core search business and cloud computing division.
The company posted a profit of $34.5 billion for the most recent quarter, while cloud computing revenue surged 48 percent to $17.7 billion.
“We’re seeing our AI investments and infrastructure drive revenue and growth across the board,” Pichai said.
Google’s core search and advertising operations remained the main source of income, bringing in $82.3 billion up from $72.5 billion in the same period the previous year.
YouTube advertising revenue also showed solid growth, rising to $11.4 billion from $10.5 billion a year earlier.
Strong cash flows from online advertising provide Alphabet with a significant edge in funding its AI infrastructure development.
Google now has more than 325 million paid subscriptions across its consumer services, including Google One and YouTube Premium.
The cloud computing division, which competes directly with Amazon Web Services and Microsoft Azure, has emerged as a major driver of Alphabet’s overall growth.
Alphabet continues to benefit from a U.S. court decision late last year that did not require the company to divest its Chrome browser in response to monopoly allegations.
Google has recently informed the court of its intention to appeal a federal judge’s ruling that found it maintained an illegal monopoly in online search, according to court documents.
Despite the strong financial performance, Alphabet’s “Other Bets” division, which includes the autonomous vehicle company Waymo, recorded a loss of $3.6 billion on revenues of only $370 million.
Waymo, the self-driving car unit, announced this week that it secured $16 billion in a new funding round, valuing the Alphabet subsidiary at $126 billion.
Alphabet was the primary investor in that funding round.
Waymo co-chief executives Tekedra Mawakana and Dmitri Dolgov described the substantial investment as confirmation that large-scale autonomous transportation has arrived.
“This infusion of capital will ensure we are positioned to move forward with unprecedented velocity, while maintaining our industry-leading safety standards,” Dolgov and Mawakana said in a blog post.
Last year, Waymo more than tripled its annual ride volume to 15 million rides and now delivers over 400,000 rides per week across the six major U.S. metropolitan areas where it operates, the company reported.
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