Alphabet reported a standout earnings period, with quarterly revenue rising 18 percent compared to the same period last year and full-year revenue crossing the $400 billion mark for the first time since the company was founded in 1998 by Larry Page and Sergey Brin.
Alphabet Crosses $400B in Annual Revenue as Quarterly Sales Jump 18%
The company’s strong performance was driven largely by continued investment in cloud services and artificial intelligence, which helped push revenues higher across multiple business segments.
Alongside these gains, Alphabet announced plans to sharply increase spending as competition in AI intensifies across Silicon Valley.
The company said it expects capital expenditure in 2026 to fall between $175 billion and $185 billion, nearly double what it spent in 2025, as it scales infrastructure to meet growing demand for AI-related products.
Even with aggressive infrastructure expansion, Alphabet says customer demand is still exceeding its current capacity, particularly in AI computing.
Chief executive Sundar Pichai acknowledged the imbalance during the earnings call, saying, “We’ve been supply constrained even as we’ve been ramping up our capacity.”
Despite the strong financial results, Alphabet’s stock slipped a little over one percent in after-hours trading following the announcement.
Google’s Gemini artificial intelligence platform continued its rapid adoption, ending the year with 750 million monthly users, which represents a jump of 100 million users compared to the previous quarter.
An analyst from Emarketer, Nate Elliott, suggested that Google’s momentum could put it ahead of OpenAI in the AI race this year, saying, “We expect Google to overtake OpenAI this year for the top spot in AI.”
In the final quarter of 2025, Alphabet generated $113.8 billion in revenue, with its traditional search business and cloud computing operations contributing the most.
The company posted a quarterly profit of $34.5 billion, supported by a sharp rise in cloud revenue, which surged 48 percent year-on-year to reach $17.7 billion.
Pichai pointed to AI-driven infrastructure as a core factor behind this performance, stating, “We’re seeing our AI investments and infrastructure drive revenue and growth across the board.”
Google Search and Ads Drive $82.3B in Quarterly Revenue
Google’s search and advertising business remained Alphabet’s largest revenue source, bringing in $82.3 billion, up from $72.5 billion in the same quarter a year earlier.
Advertising revenue from YouTube also showed solid growth, increasing to $11.4 billion from $10.5 billion year-on-year.
Alphabet said the steady cash flow from its advertising businesses gives it a strategic edge when funding large-scale AI infrastructure projects.
The company disclosed that it now has more than 325 million paid subscriptions across its consumer services, including products such as Google One and YouTube Premium.
Alphabet’s cloud unit has emerged as a major growth driver and competes directly with Amazon Web Services and Microsoft Azure in the global cloud market.
The company also continues to benefit from a U.S. court decision last year that did not require it to divest its Chrome browser despite monopoly-related concerns.
At the same time, Google has informed the court that it plans to appeal a federal judge’s ruling which found that the company held an illegal monopoly in online search.
While most of Alphabet’s core businesses performed strongly, its experimental “Other Bets” division recorded a loss of $3.6 billion during the period, generating only $370 million in revenue.
This division includes autonomous driving company Waymo, which continues to operate at a loss.
Waymo announced this week that it raised $16 billion in a new funding round, valuing the subsidiary at $126 billion.
Alphabet was the largest investor in that funding round, reinforcing its long-term commitment to autonomous vehicle technology.
Waymo co-chief executives Tekedra Mawakana and Dmitri Dolgov described the funding as a major milestone for the industry, saying, “This infusion of capital will ensure we are positioned to move forward with unprecedented velocity, while maintaining our industry-leading safety standards.”
According to the company, Waymo more than tripled its annual ride volume last year, reaching 15 million rides.
The autonomous vehicle service now delivers over 400,000 paid rides each week across six major metropolitan areas in the United States where it currently operates.
