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(Sharecast News) - Google parent Alphabet is to significantly ramp up spending after a robust fourth quarter and strong cloud demand helped annual revenues top $400bn for the first time.
Posting numbers after the bell on Wednesday, fourth-quarter revenues at the US tech giant rose 18% to $113.8bn - ahead of forecasts for $111.4bn - while net income soared 30% to $34.5bn.
Driving the growth was buoyant demand for Google Services, which includes Google Search, subscriptions and YouTube. Revenues at the division jumped 14% during the quarter to $95.9bn.
Its cloud division also saw notable growth, however, with revenues spiking 48% at $17.7bn, led by an increase in Google Cloud Platform across artificial intelligence infrastructure and enterprise AI solutions.
Alphabet also launched the latest version of its AI tool Gemini, which now has over 750m monthly active users.
Over the full year, revenues rose 15% to $402.8bn, a company record, while net income was $132.2bn, up from $100.1bn a year earlier.
Sunar Pichai, chief executive, called the fourth quarter "tremendous".
He continued: "The launch of Gemini 3 was a major milestone and we have great momentum.
"We are seeing our AI investments and infrastructure drive revenue and growth across the board. To meet demand and capitalise on the growing opportunities we have ahead of us, our 2026 capital expenditure investments are anticipated to be in the range of $175bn to $185bn."
That compares to $91.45bn in 2025, and far outstripped expectations for a 2026 outlay closer to $115bn.
Derren Nathan, head of equity research at Hargreaves Lansdown, said it was an "eyewatering number, but one that has the potential to cement Alphabet as one of the outright winners in the AI landgrab, if execution remains on point".
Chris Beauchamp, chief market analyst at IG, said: "Alphabet beat on both earnings and revenues but the market took fright at the big forecast increase in capex.
"After years of Cloud revenue growth, it's now going all in to achieve a dominant position in AI.
"But the risk is clear - if this spending doesn't pay off, then trouble lies ahead."
As at 0915 GMT, the Nasdaq-listed stock was down 2% in pre-market trading.