Alphabet (GOOGL) Earnings Beat: Cloud Surge, AI Momentum; 2026 Capex Plan Announced

Alphabet (GOOGL) reported Q4 revenue of $113.8B, up 18% YoY, and EPS of $2.82, up 31% YoY, beating estimates of $111.3B revenue and $2.64 EPS. Search revenue rose 17%, Google Services grew 14% to $95.9B, and YouTube ads climbed 9% to $11.4B. Google Cloud revenue jumped 48% to $17.7B, with operating income of $5.3B and an operating margin over 30%. The quarter’s most disruptive news: Alphabet plans $175B–$185B in 2026 capital expenditures, more than double the $115B–$120B previously expected, dwarfing peers like Meta ($115B–$135B) and Microsoft’s current $37.5B-quarter spend. Free cash flow remained roughly flat YoY despite a 34% rise in operating cash flow to $52.4B, as capex consumption outpaced operating cash. EPS included a $2.3B gain on equity securities, and Waymo’s $2.1B employee compensation charge widened other bets losses. The aggressive spending underscores Alphabet’s infrastructure pivot and the risk premium investors are pricing into its AI transition.