San Francisco,
Google’s parent company, Alphabet, has crossed a historic milestone, reporting annual revenue of more than $400 billion for the first time, as rapid growth in advertising and cloud services outweighed rising costs linked to artificial intelligence investment.
The technology giant said revenue rose 18% year on year in the final quarter of 2025, highlighting the continued strength of Google’s core businesses even as it pours billions into expanding its AI infrastructure.
Alphabet, founded in 1998 by Larry Page and Sergey Brin, also warned that spending would rise sharply in the coming year, signalling an intensifying technology arms race across Silicon Valley.
The company expects capital expenditure to reach between $175bn and $185bn in 2026, nearly double what it spent in 2025, as it races to meet growing demand for AI-powered products and cloud computing capacity.
Chief executive Sundar Pichai said demand continues to exceed supply, despite aggressive expansion of data centres and computing infrastructure. Speaking during an earnings call, he said Google has remained “supply constrained” even as it rapidly scales up its capabilities.
Alphabet’s shares slipped slightly in after-hours trading following the announcement, reflecting investor concerns about the scale of upcoming investment.
Artificial intelligence remains a central driver of growth. Google’s Gemini AI platform ended the year with 750 million monthly users, an increase of 100 million from the previous quarter, underlining the platform’s rapid adoption.
Industry analysts say Google is now emerging as a serious challenger to established AI leaders. eMarketer analyst Nate Elliott said the company could overtake OpenAI this year to become the dominant player in the AI space.
Financial results showed Alphabet generated $113.8bn in revenue during the final three months of 2025, while quarterly profit reached $34.5bn.
The company’s cloud computing division continued its strong expansion, with revenue surging 48% to $17.7bn, as enterprises increasingly turn to AI-enabled cloud services. The unit has become a key growth engine and competes directly with Amazon Web Services and Microsoft Azure.
Advertising remained Alphabet’s biggest revenue stream. Google’s search and advertising business brought in $82.3bn, up from $72.5bn a year earlier, while YouTube advertising revenue rose to $11.4bn.
The steady flow of advertising income has given Alphabet a financial advantage, allowing it to invest heavily in AI infrastructure at a scale few rivals can match. The company also said it now has more than 325 million paid subscriptions across services such as Google One and YouTube Premium.
Alphabet continues to benefit from a US court ruling last year that allowed it to retain ownership of its Chrome browser amid antitrust scrutiny. However, Google has confirmed it will appeal a separate decision that found it held an illegal monopoly in online search.
Not all parts of the business performed as strongly. Alphabet’s experimental “Other Bets” division reported a loss of $3.6bn, despite generating $370m in revenue. The unit includes autonomous vehicle company Waymo.
Waymo recently raised $16bn in new funding, valuing the business at $126bn, with Alphabet remaining the largest investor. The company said the funding would help accelerate the rollout of large-scale autonomous mobility services.
Waymo reported that it more than tripled its annual ride volume last year to 15 million rides, now providing over 400,000 rides per week across six major US cities in the United States.
