Alphabet (GOOGL): AI-Driven Growth vs. $175B–$185B 2026 Capex Headwind

Alphabet (GOOGL) posted Q4 and full-year 2025 results exceeding $400B in annual revenue, with Q4 revenue up 18% YOY to $113.8B. AI-driven growth and a $240B cloud backlog are accelerating, led by Google Cloud revenue rising 48% to $17.7B and YouTube advertising up 9% to $11.4B. However, shares reacted muted to the strong results amid guidance for $175B–$185B in 2026 capex, roughly double 2025’s $91.5B, which will drive higher depreciation and compress free cash flow through 2026. The consensus remains “Strong Buy” despite the near-term liquidity headwind, as management’s AI and cloud investments are translating into durable revenue growth and expanding enterprise contracts.