Google’s parent company, Alphabet, has recorded a major financial milestone after its annual revenue exceeded $400 billion for the first time, driven largely by strong growth in cloud computing, artificial intelligence (AI) services, and its core advertising business.
The technology giant reported an 18 per cent year-on-year increase in quarterly revenue, reflecting sustained demand for AI-powered products and digital services.
Alphabet said it plans to significantly expand investment in AI infrastructure, projecting capital expenditures between $175 billion and $185 billion in 2026 roughly double its 2025 spending to meet growing customer demand.
Chief Executive Officer Sundar Pichai noted that despite aggressive infrastructure expansion, demand for AI computing capacity continues to outpace supply. He explained that the company has been scaling up rapidly but still faces constraints due to the surge in global interest in AI technologies.
Alphabet generated $113.8 billion in revenue during the final quarter of 2025, supported by its dominant search advertising business and rapidly expanding cloud services.
Quarterly profit reached $34.5 billion, while cloud revenue jumped 48 per cent to $17.7 billion, underscoring AI’s growing role as a revenue driver.
Google’s Gemini AI platform also saw rapid adoption, ending the year with about 750 million monthly users an increase of roughly 100 million compared with the previous quarter. Some industry analysts predict Google could soon rival or surpass competitors in the increasingly competitive AI market.
Advertising remains Alphabet’s largest income source, with search-related revenues rising to $82.3 billion from $72.5 billion a year earlier.
YouTube advertising also posted growth, generating $11.4 billion compared with $10.5 billion previously.
These earnings continue to provide the financial base for Alphabet’s heavy investment in AI research, data centres, and computing infrastructure.
The company also reported more than 325 million paid subscriptions across services such as Google One and YouTube Premium, indicating sustained consumer demand for digital subscription offerings.
Meanwhile, Alphabet’s Other Bets division, which includes autonomous vehicle company Waymo posted a loss of $3.6 billion on revenues of $370 million.
Despite the losses, Waymo recently secured a $16 billion funding round that valued the self-driving car unit at approximately $126 billion, signalling continued investor confidence in autonomous mobility technology.
Waymo executives said the new funding would accelerate expansion while maintaining safety standards, noting that the service completed about 15 million rides last year and now averages over 400,000 weekly trips across six major US cities.
Alphabet also continues to navigate regulatory scrutiny. Although a US court ruling last year spared Google from being forced to divest its Chrome browser over monopoly concerns, the company has indicated plans to appeal aspects of a separate ruling that found it held an illegal monopoly in online search.
Despite these challenges, Alphabet’s latest results highlight the central role AI is playing in shaping the company’s future growth strategy and the broader technology industry.
