Alphabet’s revenue continues growing and announces record investment in AI cloud

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Alphabet has once again increased revenue and profits both in the fourth quarter of 2025 and for the entire past year, largely exceeding analysts' expectations, even though they had already anticipated solid growth. Only YouTube's advertising revenue is slightly lower than expected. However, in 2026, the Google group will drastically increase its spending. Sundar Pichai, CEO of Alphabet and Google, announced investments between 175 and 185 billion US dollars. This is practically a doubling compared to the previous year.

In the fourth quarter, which ended in December, Alphabet increased revenue to $113.83 billion and operating profit to $35.93 billion. This corresponds to growth rates of 18 and 16 percent compared to the previous year, when Alphabet's growth disappointed investors. Net profit for the last quarter even grew by 30 percent year-on-year to $34.45 billion.

Number of employees is rising again

For the entire past year, Alphabet's revenue increased by 15 percent compared to 2024, reaching $402.84 billion. Operating profit grew by 7 percent in 2025 to $129.04 billion, and net profit even increased by 32 percent year-on-year to $132.17 billion. At the same time, the era of mass layoffs seems to be over, at least at Google. At the end of 2025, Alphabet had 190,820 employees, 4 percent more than at the end of 2024.

Google CEO Pichai describes the financial results as a “great quarter for Alphabet” and emphasizes that annual revenue has surpassed $400 billion for the first time. At the same time, YouTube revenue from advertising and subscriptions has exceeded $60 billion. Pichai also points to more than 325 million paying subscribers for the group's various services, led by Google One and YouTube Premium.

Advertising dominates, but Cloud grows faster

Advertising revenue continues to make up the largest portion of Alphabet's revenue. In the last quarter, it rose by almost 14 percent to $82.28 billion. Revenue from subscriptions, platforms, and devices, at $13.58 billion, is modest in comparison, but still increased by almost 17 percent year-on-year. However, the Cloud business shows the strongest growth. Here, Google was able to increase quarterly revenue by a massive 48 percent year-on-year to $17.66 billion.

This is precisely where the data group intends to invest more in 2026, likely to fully exploit its growth potential. The investments announced for this year, ranging from 175 to 185 billion dollars, are to be primarily allocated to AI computing capacities for Google DeepMind, as Alphabet CFO Anat Ashkenazi explained according to CNBC in a discussion with analysts, “to meet significant customer demand in the cloud sector and make strategic investments in other areas.” Furthermore, the expenditures are to be used to “improve the user experience and achieve a higher ROI for advertisers in Google services.”

Gemini AI becomes more cost-efficient

Alphabet further emphasizes that Google's Artificial Intelligence in the form of the Gemini app now has more than 750 million users who use the app at least once a month. In the last quarter, there were still 650 million monthly active users. “As we scale, we become significantly more efficient,” Pichai said. “Through model optimizations and improvements in efficiency and usage, we were able to reduce Gemini service costs per unit by 78 percent by 2025.”

Investors were not enthusiastic despite this higher AI efficiency. Google's stock price has partially fallen by around 3 percent in after-hours trading. However, the stock quickly recovered and is now almost back to the level it was at the close of yesterday's trading day.

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