Google parent Alphabet on Wednesday reported blockbuster earnings, its revenue climbing as it invests massively in cloud computing services enhanced with artificial intelligence.

The tech giant said revenue jumped 18 per cent year-on-year in the quarter, and overall annual revenue topped $400 billion for the first time at the company founded by Larry Page and Sergey Brin in 1998.

But Alphabet said it will nearly double its investments this year in the technology arms race gripping Silicon Valley.

The company expects capital expenditures between $175 billion and $185 billion in 2026, double its 2025 spending, to meet customer demand for AI products.

Despite Alphabet relentlessly investing in computing infrastructure for AI, demand outstrips supply, according to chief executive Sundar Pichai.

"We`ve been supply constrained even as we`ve been ramping up our capacity," Pichai said on an earnings call.

Alphabet shares were down slightly more than one percent in after-market trades.

Gemini wins fans

Google`s Gemini AI continued to grow quickly, ending the year with 750 million monthly users in an increase of 100 million from the previous quarter.

"We expect Google to overtake OpenAI this year for the top spot in AI," said Emarketer analyst Nate Elliott.

Alphabet brought in $113.8 billion in the final three months of 2025, powered by its core search business and cloud computing, earnings figures showed.

Alphabet reported profit of $34.5 billion in the recently ended quarter as revenue from cloud computing soared 48 percent to $17.7 billion.

"We`re seeing our AI investments and infrastructure drive revenue and growth across the board," Pichai said.

Google`s core search and advertising business remained the primary revenue driver, generating $82.3 billion, up from $72.5 billion a year earlier.

YouTube advertising revenues also grew strongly to $11.4 billion from $10.5 billion.

The cash flowing in from online advertising gives Alphabet an advantage when it comes to investing in AI infrastructure.

Google said it now counts over 325 million paid subscriptions across consumer services, including Google One and YouTube Premium.

The cloud division, which competes with Amazon Web Services and Microsoft Azure, has become a key growth engine for Alphabet.

Keeping Chrome

Alphabet continues to benefit from a US court ruling late last year that spared the Internet giant from having to sell off its Chrome browser to address monopoly concerns.

Google recently notified the court it will appeal the federal judge`s ruling that it held an illegal monopoly on online search, court records show.

Despite the robust growth, Alphabet`s experimental "Other Bets" division, which includes autonomous vehicle unit Waymo, posted a loss of $3.6 billion on revenues of just $370 million.

Self-driving car star Waymo said this week that it raised $16 billion in a funding round that valued the Alphabet subsidiary at $126 billion.

Alphabet was the majority investor in that funding round.

Waymo co-chief executives Tekedra Mawakana and Dmitri Dolgov touted the massive investment as a sign that the age of large-scale autonomous mobility has arrived.

"This infusion of capital will ensure we are positioned to move forward with unprecedented velocity, while maintaining our industry-leading safety standards," Dolgov and Mawakana said in a blog post.

Last year, Waymo more than tripled its annual volume to 15 million rides and now provides more than 400,000 rides weekly in the six major US metropolitan areas where it operates, according to the company.

Source: AFP