Alphabet surpasses $400 billion in annual sales for the first time, driven by AI and cloud

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$400 Billion Milestone: Google’s Parent Company Alphabet’s Record-Breaking Performance

  • Alphabet’s Annual Revenue Exceeds $400 Billion for the First Time
  • Q4 Revenue Reaches $113.8 Billion, Up 18% Year-Over-Year
  • Google Cloud’s 48% Rapid Growth is the Key Driver

What Happened?

Google’s parent company, Alphabet, surpassed $400 billion in annual revenue for the first time in 2025. Q4 revenue alone reached $113.8 billion, an 18% increase compared to the same period last year ($96.5 billion).[CNBC] Net income increased by approximately 30% year-over-year to $34.46 billion.[9to5Google]

Looking at each business segment, advertising revenue grew by 13.5% to $82.28 billion. YouTube advertising recorded $11.38 billion. The most notable is Google Cloud, which grew nearly 48% year-over-year, driving Alphabet’s growth.[Android Central]

Why is it Important?

This performance shows that AI investments are translating into actual revenue. The explosive growth of Google Cloud is directly related to the increasing demand for AI infrastructure. As companies move AI workloads to the cloud, Google is benefiting.

Sundar Pichai, CEO, announced that Gemini AI app has over 750 million monthly active users. This is an increase of 100 million from 650 million in the previous quarter, signaling the rapid adoption of AI services.

What Happens Next?

Alphabet expects capital expenditures of $175 billion to $185 billion in 2026, more than double the spending in 2025. This signifies an aggressive investment in AI data centers and infrastructure. It can be interpreted as a strategy to narrow the gap with Microsoft and Amazon in the cloud and AI competition.

However, it remains to be seen whether this level of investment will continue to translate into profits. Overheating competition in AI infrastructure could lead to lower profitability.

Frequently Asked Questions (FAQ)

Q: Which segment grew the most in Alphabet’s Q4 performance?

A: Google Cloud recorded the highest growth rate, growing 48% year-over-year. The main drivers are increased demand for AI workloads and corporate cloud migration. The advertising sector also grew by 13.5%, but the growth of the cloud was overwhelming.

Q: How much has the number of Gemini AI users increased?

A: Gemini AI app has surpassed 750 million monthly active users, an increase of 100 million in just one quarter from 650 million in the previous quarter. This shows that Google’s AI service adoption is rapidly spreading.

Q: What is Alphabet’s capital expenditure plan for 2026?

A: Alphabet expects capital expenditures of $175 billion to $185 billion in 2026, which is more than double the spending in 2025. This demonstrates a commitment to investing heavily in expanding AI data centers and strengthening infrastructure.

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References

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