Alphabet (GOOG) Stock: Analyst Says ‘Ignore the Noise’ After Earnings Beat

TLDR

• Alphabet posted Q4 revenue of $113.8 billion, up 18% year-over-year, topping $111.5 billion consensus, with EPS at $2.82 beating $2.64 forecast.
• Google Cloud delivered standout performance with 48% revenue growth to $17.7 billion and 30% operating margin, surpassing Microsoft Azure’s growth.
• 2026 capex guidance of $175-$185 billion doubles 2025’s $91.5 billion spend, exceeding Street expectations by over $30 billion.
• J.P. Morgan upgraded price target to $395 from $385, citing strong returns across Gemini, Cloud, and Search despite free cash flow headwinds.
• Google Cloud backlog surged 55% quarter-over-quarter to $240 billion while Gemini reached 750 million monthly active users.

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Alphabet delivered a knockout Q4 earnings report. Yet shares dipped in the aftermath.

The tech giant reported $113.8 billion in total revenue for the quarter. That’s 18% higher than last year and above the $111.5 billion Wall Street expected.

Alphabet Inc., GOOGL

Earnings per share hit $2.82. Analysts were looking for $2.64.

Google Services accelerated throughout the quarter. But Google Cloud stole the spotlight with revenue climbing 48% to $17.7 billion.

That growth rate demolished Microsoft Azure’s 39% increase. Google Cloud also achieved a 30% operating margin, proving profitability at scale.

Search revenue grew 17% despite fears that AI chatbots would eat into the business. The doomsday predictions haven’t materialized.

Gemini now counts 750 million monthly active users. User engagement has jumped too.

Why Investors Hit the Sell Button

The earnings beat didn’t matter to traders focused on one number. Capital expenditures.

Alphabet spent $91.5 billion on capex in 2025. That matched its guided range of $91-$93 billion.

For 2026, management outlined plans to spend $175-$185 billion. That’s roughly double last year’s total.

The Street had already pushed estimates to $142 billion at the high end. Alphabet’s guidance sailed past that mark by over $30 billion.

J.P. Morgan analyst Doug Anmuth called the spending increase a move from “a position of strength.” He ranks among the top 3% of Wall Street analysts.

The spending will pressure free cash flow hard. Anmuth projects $29 billion for 2026, down 61% from 2025 levels.

Depreciation should spike 73% as 2025’s investments hit the income statement. That creates a near-term earnings headwind.

Alphabet still maintains $80 billion in net cash. That buffer provides breathing room for the aggressive spending plan.

Cloud Backlog Justifies Heavy Investment

Google Cloud’s backlog jumped 55% quarter-over-quarter to $240 billion. That’s contracted revenue already locked in.

Management highlighted efficiency gains across tech infrastructure, server deployment, and TPU development. Headcount discipline continues.

Anmuth raised his price target from $385 to $395, implying 22% upside. He maintained an Overweight rating on the shares.

The analyst sees clear returns emerging across Gemini, Cloud, and Search. Google’s multi-year backlog differentiates it from competitors.

Wall Street maintains a Strong Buy consensus on Alphabet. Twenty-five Buy ratings and seven Holds combine for bullish sentiment.

The average price target stands at $376.63, suggesting 17% gains ahead.

Alphabet’s $900 million SpaceX investment from 2015 looks brilliant now. SpaceX targets a $1.5 trillion IPO valuation.

Waymo keeps expanding robotaxi operations across multiple cities. The autonomous driving unit could eventually operate as a standalone business.

Google Cloud posted the fastest growth among major platforms. If that 48% pace holds, the company positions itself as a cloud computing leader.

The Q4 report proved AI hasn’t disrupted Google’s core business. Revenue actually accelerated through 2025 instead of declining.

Alphabet announced Google Cloud revenue reached $17.7 billion with a backlog of $240 billion during its February 8, 2026 earnings call.

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