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Alphabet (GOOG/GOOGL) delivered another impressive performance for 4Q25, yet the stock is trading sharply lower as investors grapple with the staggering price tag of the company's AI ambitions. While GOOG crushed 4Q25 estimates across revenue and earnings, its massive FY26 CapEx guidance has sent a shockwave through the market, overshadowing a quarter where Cloud and Search both showed accelerating momentum.

• GOOG reported non-GAAP EPS of $2.82, a 31% yr/yr increase, while consolidated revenue jumped 18% to $113.8 bln, comfortably beating expectations.
• The primary cause for the stock's weakness is the FY26 CapEx forecast of $175-$185 bln. At the high end, this represents a roughly 102% increase over 2025's $91.4 bln spend.
• This spending -- earmarked for data centers and compute capacity -- dwarfs Meta Platform's (META) FY26 forecast of $115-$135 bln, sparking fears about near-term margin compression.
• Google Cloud was the undisputed star of the quarter, with revenue surging 48% to $17.7 bln. Growth was driven by a "double the new customer velocity" compared to early 2025 and a record number of deals exceeding $1 bln.
• Search and other revenues reached $63.1 bln (+17%), fueled by the integration of Gemini 3 into AI Mode and AI Overviews. These AI features are fundamentally changing user behavior: queries in AI mode are now three times longer than traditional searches, and 1 in 6 queries are now non-text (voice or image).
• Advertising revenue grew 14% to $95.9 bln, led by retail strength in Search and direct response in YouTube. The deployment of Gemini across the Ads stack has allowed for nearly one product launch per month, helping advertisers generate 70 mln creative assets in Q4 alone.
• Waymo reached significant milestones, surpassing 20 mln fully autonomous trips and providing over 400,000 rides per week. The unit recently raised its largest investment round to date ($16 bln), though a related $2.1 bln valuation charge weighed on GOOG's Q4 operating margins.
• A strategic partnership with Apple (AAPL) was confirmed, naming GOOG the preferred cloud provider to develop the next generation of Apple Foundation models based on Gemini technology. This move positions Gemini as the primary engine for one of the world's largest device ecosystems.

Briefing.com Analyst Insight

GOOG’s Q4 results present a "good news is bad news" paradox. While the company proved its AI investments drive revenue growth -- evidenced by the 48% Cloud surge and record Search usage signals -- the cost to remain competitive is staggering. The AAPL partnership is a significant strategic win, but the market is currently fixated on near-term margin pressure from depreciation and rising infrastructure costs. The question isn’t whether GOOG can lead in AI, but at what cost to the bottom line. GOOG is betting its $240 bln backlog will eventually outpace the massive infrastructure bill required to power the Gemini era.