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Alphabet shares closed flat on Thursday after the company said it would hugely increase its AI spending in 2026.
Google Services — the segment including ad revenue from Search and YouTube, which accounts for the majority of Alphabet's revenue — is estimated to see revenue climb a more modest 13% from the previous year to $94.9 billion, per Bloomberg consensus estimates.
Alphabet CEO skipped an analyst's question about Apple on the company's earnings call.
With the projection, Alphabet is resetting the year's expectations for how it'll spend in 2026 and testing its favor with Wall Street. The company said in October that it expected "a significant increase" to capex in 2026, but the projections shared Wednesday surpassed those of its hyperscaler peers.
Alphabet beats earnings, but heavy AI infrastructure spending outlook unsettles Wall Street despite strong Google Cloud growth.
Meanwhile, the Google Cloud business is also going strong. Revenue from the unit, which houses most of Google’s AI services and products, jumped 48% from a year earlier to $17.66 billion, surpassing the Street’s $16.18 billion forecast. Its order backlog increased 55% too, reaching $240 billion by the end of the quarter, Ashkenazi said.
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Alphabet Inc. (NASDAQ:GOOGL) is one of the 10 Hottest Stocks to Buy in 2026. On January 28, Alphabet Inc. (NASDAQ: GOOGL) announced that Google is adding additional Gemini AI features to the Chrome browser.