Alphabet's Q4 results beat expectations, but the real news came in the fine print: Google plans to blow past Wall Street's spending forecasts in 2026, nearly doubling its AI infrastructure investment.
The numbers: Q4 revenue climbed 18% year-over-year to $113.8B (versus $111.4B expected). Google Cloud posted 48% growth to $17.7B, ahead of the $16.2B consensus. Net income rose 30% to $34.5B. For the full year, Alphabet crossed $400B in annual revenue for the first time.
What matters for APAC enterprise: The spending announcement signals Google believes the AI infrastructure race is far from over. CEO Sundar Pichai warned on the earnings call about supply constraints, echoing Nvidia's recent comments about bottlenecks. This affects procurement timelines for enterprises banking on Google Cloud capacity.
The capex question: Google's aggressive spending comes as software stocks broadly face pressure over AI disruption fears. Software sector P/E ratios have fallen 15% year-to-date to 28x, per FactSet data through February 4. Competitors like Salesforce and Adobe have seen stock declines despite solid earnings, as investors worry about AI's impact on existing business models.
Worth noting: The company declined to discuss details of its Gemini partnership with Apple, despite investor questions. This opacity matters as enterprises evaluate multi-cloud AI strategies.
Regional context: The spending push affects APAC differently than other markets. McKinsey's Q4 2025 survey found 62% of APAC firms are piloting AI, but only 18% have moved to production. Google's infrastructure bet assumes that gap closes, fast.
The pattern: This is Google's third major infrastructure build-out in a decade (after search and cloud). Previous cycles took 3-5 years to show returns. Enterprise buyers should plan procurement accordingly. The AI software market is projected to grow from $85B in 2025 to $200B by 2028, per Gartner, but delivery timelines remain uncertain.
What to watch: How quickly Google can convert cloud growth into margin improvement. The 48% revenue increase is impressive. The spending increase is larger.