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Alphabet (GOOGL, GOOG) stock fell as much as 7% after the bell Wednesday before recovering as the tech giant’s 2026 capital expenditure forecast soared past analyst expectations.
In its fourth quarter earnings report, Google parent company Alphabet forecast 2026 capital expenditures of $180 billion at the midpoint, well above the $119.5 billion projected by analysts tracked by Bloomberg.
The stock pared losses and hovered around the flat line shortly after the results.
“We’re seeing our AI investments and infrastructure drive revenue and growth across the board,” CEO Sundar Pichai said in the company’s press release. He said the higher 2026 spending would allow the company “to meet customer demand and capitalize on the growing opportunities.”
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Meanwhile, the company’s fourth quarter financial results beat Wall Street’s estimates on the top and bottom lines. Fourth quarter revenue climbed 18% to $113.8 billion from the year-ago period, ahead of the $111.4 billion expected by analysts. The tech giant’s earnings per share rose to $2.82 from $2.15 in the previous year, also higher than the $2.65 projected.
The jump in revenue was spurred by a 48% spike in Google Cloud revenue to $17.7 billion, more than the $16.2 billion expected by analysts.
Google Services — the segment including ad revenue from Search and YouTube, which accounts for the majority of Alphabet’s revenue — saw revenue climb a more modest 14% from the previous year to $95.9 billion, higher than the projected $94.9 billion, per Bloomberg consensus estimates.
Alphabet’s fourth quarter capex of $27.9 billion was slightly less than the expected $28.2 billion for the period, per Bloomberg estimates.
Alphabet stock had soared more than 20% since its last earnings report showed the tech giant beginning to benefit from a slew of AI deals with Meta (META), Anthropic (ANTH.PVT), and OpenAI (OPAI.PVT) involving its Cloud segment. At the same time, the broader “Magnificent Seven” group of Big Tech stocks has been collectively down nearly 5% over that period, led by a 23% drop in Microsoft (MSFT) shares.
The release of Google’s Gemini 3 AI model — which outperformed competing models on benchmark tests and prompted rival OpenAI to declare a “code red” — as well as the announcement of a landmark deal with Apple, cemented Alphabet’s position as an AI winner and pushed the stock higher.
“The launch of Gemini 3 was a major milestone and we have great momentum,” Pichai added. He noted that the Gemini app now has more than 750 million monthly active users.