Alphabet, Google’s parent company, reported a strong finish to fiscal year 2025, exceeding $400 billion in annual revenue for the first time. The company’s fourth-quarter results, released on , showed total revenue of $113.8 billion, an 18% increase compared to the same period in 2024. The results were driven by continued growth in Search, YouTube, and, notably, Google Cloud.
Revenue Breakdown and Key Growth Areas
Google Services, encompassing Search, subscriptions, platforms, devices, and YouTube ads, generated $95.9 billion in revenue during the quarter. Within Google Services, YouTube advertising contributed $13.6 billion, marking a 9% increase, primarily fueled by direct response advertising. However, network advertising revenues experienced a slight decline of 2% year-over-year.
Google Cloud demonstrated significant acceleration, with revenues reaching $17.7 billion, a substantial 48% increase compared to Q4 2024. This growth positions Google Cloud on an annual run rate exceeding $70 billion. The company’s backlog also grew significantly, increasing by 55% quarter-over-quarter to $240 billion, reflecting strong demand for its artificial intelligence (AI) products.
The Gemini Effect: AI Driving Growth
The launch of Gemini 3 was highlighted by Alphabet CEO Sundar Pichai as a “major milestone” driving momentum across the company. The company reports that its first-party AI models, including Gemini, now process over 10 billion tokens per minute through direct API use by customers. The Gemini app itself has surpassed 750 million monthly active users, with engagement per user increasing since the December launch of Gemini 3.
More than 120,000 enterprises, including Airbus, Honeywell, Salesforce, and Shopify, are utilizing Alphabet’s AI tools. A strategic collaboration with Apple was also noted, with Apple designating Google Cloud as its preferred cloud provider and partnering to develop the next generation of Apple Foundation models based on Gemini technology.
Investment in AI Infrastructure
To capitalize on the growing demand and opportunities presented by AI, Alphabet anticipates capital expenditures (CapEx) in the range of $175 to $185 billion for 2026. This substantial investment underscores the company’s commitment to expanding its AI infrastructure and capabilities.
Subscription Services and Monetization
Alphabet continues to expand its subscription base, with over 325 million paid subscriptions across its consumer services, including Google One and YouTube Premium. The company has also sold more than eight million paid seats of Gemini Enterprise, launched just four months prior to the earnings report.
Advertising Strategy and AI Integration
Philipp Schindler, Senior Vice President and Chief Business Officer at Google, emphasized the transformative potential of AI in advertising. We’re expanding the entire playing field that advertisers can compete on. AI gives businesses the ability to reach more customers in more places than ever before.
Schindler stated.
Alphabet is focusing on leveraging AI to drive significant improvements
across all areas of marketing, specifically in ad quality and query understanding, ad tools for greater accuracy, and AI-powered user experiences to better match ads and products to the appropriate users.
Financial Performance Highlights
Beyond revenue, Alphabet’s Q4 2025 earnings demonstrated strong financial performance. Operating income reached $35.93 billion, and net income totaled $34.46 billion, compared to $26.54 billion in the same quarter of the previous year. This represents an 18% increase in revenue and a 31% increase in earnings per share (EPS), which rose to $2.82.
The company’s overall performance reflects a continued expansion of its core businesses, coupled with the emerging impact of its investments in artificial intelligence. The strong cloud performance and growing subscription base further contribute to Alphabet’s positive trajectory as it enters 2026.
