Google's parent company surpasses $400 billion in annual revenue; capital expenditures will double

On February 4th, Google’s parent company Alphabet (GOOG) released its financial report for Q4 and the full year of 2025.

Data shows that the company’s total annual revenue for the first time surpassed $400 billion, a 15% year-over-year increase. Company executives stated that the deployment of AI technology and the rapid expansion of Google Cloud business have become the main drivers of the company’s performance growth.

Impressive Performance

The financial report indicates that Alphabet’s profitability continued to improve. In 2025, net profit reached $132.17 billion, a 32% increase year-over-year; diluted earnings per share were $10.81, up 34% year-over-year. In Q4 2025, net profit was $34.455 billion, a 30% increase from the previous year; earnings per share were $2.82, up 31% year-over-year, both exceeding market expectations. The company’s overall operating profit margin remained stable in the 31.6%–32% range.

Among business segments, Google Cloud performed particularly well, becoming the fastest-growing core business. In Q4 2025, revenue reached $17.664 billion, a 48% year-over-year surge, driven by strong customer demand for enterprise AI infrastructure, AI solutions, and core cloud services. Full-year revenue for Google Cloud exceeded $70 billion. Google Services continued steady growth, with Q4 2025 revenue of $95.862 billion, up 14% year-over-year; within this, Google Search and other businesses grew 17%, subscription, platform, and devices grew 16.7%, and YouTube advertising grew 9%. For the full year, YouTube advertising and subscriptions combined generated over $60 billion in revenue, with paid subscription users reaching 325 million. Google One and YouTube Premium became key growth drivers.

The large-scale deployment of AI technology was the biggest highlight of this financial report. Alphabet CEO Sundar Pichai stated that the launch of Gemini 3 marked an important milestone. This model handles over 10 billion tokens per minute via direct API calls from customers, and Gemini’s monthly active users have exceeded 750 million. AI technology continues to push search usage to new heights, becoming a key factor in driving advertising revenue growth. To seize long-term opportunities in AI, the company plans to invest between $175 billion and $185 billion in capital expenditures in 2026, focusing on technology R&D and infrastructure development. This expenditure nearly doubles from $91.4 billion in 2025.

In terms of regional markets, all areas achieved steady growth. The US market generated $55.444 billion in Q4 2025, a 17% increase year-over-year, remaining the largest revenue source. The Asia-Pacific region led growth, with Q4 revenue of $18.527 billion, up 22% (23% at constant exchange rates). EMEA and other Americas regions achieved year-over-year growth of 17% and 20%, respectively.

Regarding capital operations and shareholder returns, Alphabet issued $24.8 billion in unsecured senior notes in November 2025 for general corporate purposes. The board announced a quarterly cash dividend of $0.21 per share, payable on March 16, 2026, to shareholders registered as of March 9. Additionally, its autonomous driving subsidiary Waymo completed a $16 billion financing round in February 2026, mostly supported by strategic backing from Alphabet.

AI Continues Rapid Growth

At the subsequent analyst conference, Pichai responded to questions about capital expenditure, stating that although the company has been expanding capacity, supply shortages are still present. This year’s capital spending is focused on future investments, considering factors like extended supply chain lead times. The scale of 2026’s capital expenditure is based on the results of previous years, with a time lag involved. He reminded investors that demand across all business segments remains exceptionally strong, and therefore, the company expects supply constraints to persist throughout 2026.

Regarding the future development of large models, Pichai said that the momentum in the frontier of large language models is exciting, and progress is expected to continue in 2026. The company is optimizing models from multiple dimensions, including pretraining, fine-tuning, and real-time computation; integrating multimodal models and agent-based functions; and making significant advances in encoding. Google is currently integrating all these elements to provide excellent experiences through products and APIs. There remains substantial room for growth in this field, and based on progress over the past two years, Google’s pace of innovation is very fast, and the company is confident it can maintain this momentum through 2026.

Regarding TPU, Pichai said that it should be viewed from the overall advantage of Google Cloud. One major attraction of Google Cloud is the wide range of accelerators offered, which can meet diverse customer computing needs, along with the efficiency of interconnected data centers, all contributing to strong growth. Considering the company’s overall investment scale, this growth trend is expected to continue.