Key Stats for Alphabet Stock
- Pre-market Price change for Alphabet stock: -1.5%
- $GOOGL Share Price as of Feb. 4: $333
- 52-Week High: $349
- $GOOGL Stock Price Target: $346
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What Happened?
Alphabet (GOOGL) stock is down over 1% in pre-market trading despite posting strong fourth-quarter results that topped Wall Street expectations.
The company reported earnings per share of $2.82, beating analyst estimates of $2.63, while revenue reached $113.83 billion versus the $111.43 billion expected.
The decline wasn’t caused by disappointing earnings. Instead, investors reacted to Alphabet’s ambitious AI spending forecast for 2026.
- The company announced capital expenditure plans ranging from $175 billion to $185 billion—potentially more than double its 2025 spending of $91 billion.
- These investments will fund AI compute capacity for Google DeepMind, cloud infrastructure to meet surging customer demand, and strategic projects like Waymo.
Google Cloud exceeded expectations, with revenue growth of 48% and a backlog that doubled year over year to $240 billion.
However, YouTube’s advertising revenue of $11.38 billion fell short of the $11.84 billion that analysts expected.
CFO Anat Ashkenazi said the miss partly reflected tough comparisons to last year’s strong U.S. election advertising spending.
A $2.1 billion charge related to Waymo’s recent funding round also weighed on results, pushing Other Bets to a $3.61 billion loss for the quarter.
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What the Market Is Telling Us About Alphabet Stock
The market’s pullback on Alphabet stock suggests investors are focused on near-term margin pressure rather than long-term AI potential.
- While the company showed impressive growth—revenue up 18% year-over-year and net income surging 30%—the massive spending plan sparked concerns about profitability and capital efficiency.
- CEO Sundar Pichai highlighted efficiency improvements, noting that Gemini serving costs fell 78% in 2025 and the AI app now has 750 million monthly users.
- But with depreciation costs set to “meaningfully increase” in 2026, Alphabet stock faces headwinds as the company prioritizes infrastructure investments over short-term earnings.
That said, Google Cloud’s explosive performance and Alphabet’s leadership in AI development suggest the stock could deliver strong returns once these investments begin to pay off.
Investors should watch whether the historic capex spending translates into accelerating revenue growth across Search, Cloud, and new AI products over the coming quarters.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
