of the alphabet Shares fell in pre-market trading Thursday as AI spending is expected to increase significantly this year and the company beat Wall Street expectations on revenue and revenue.
Google’s parent company was down 3% in premarket as of 7:28 a.m. ET, after closing nearly 2% lower on Wednesday. After the close, Alphabet reported fourth-quarter revenue of $113.83 billion, beating analysts’ estimates of $111.43 billion compiled by LSEG.
The company’s Google Cloud division had revenue of $17.66 billion, compared to expectations of $16.18 billion, according to Street Account. YouTube advertising revenue was $11.38 billion, compared to an estimated $11.84 billion.
The tech giant announced a significant increase in capital spending for 2026 from $175 billion to $185 billion, more than double its 2025 spending. A significant portion of the capital investment will go toward investing in Google DeepMind’s AI computing power.
Analyst opinion
Barclays analysts said in a note Thursday that infrastructure, DeepMind and Waymo costs are “compressing Alphabet’s overall profitability,” a trend that is expected to continue into 2026.
“Cloud growth is incredible when measured by any metric: revenue, backlog, inferred API tokens, Gemini enterprise adoption, etc. When you combine these metrics with DeepMind’s advances on the model side, you begin to justify a 100% increase in capex in 26 years,” they said.
“While search is accelerating, the AI story is improving; that is the most important observation for GOOG,” they added.
Deutsche Bank analysts said in a note Thursday that Alphabet “surprised the world” with its massive capital spending plans. “The state of technology is in flux, and it’s not clear whether that’s a good or bad thing,” they write.
Correction: This article has been updated to reflect that Alphabet stock fell on Thursday.
