Alphabet Q4 Earnings Preview: Will Cloud and AI Justify the $4T Valuation?
Google Cloud is accelerating, Gemini adoption is growing, and ad revenues remain strong, but sky-high expectations leave little margin for disappointment
Alphabet (GOOGL) reports its Q4 2025 results on February 4, with investors watching closely to see if its multi-quarter AI-driven rally has more room to run or whether expectations have stretched too far.
Alphabet’s stock is up ~70% over the past year, significantly outperforming the S&P 500. While much of the spotlight has been on generative AI leaders like Nvidia or OpenAI, Alphabet has quietly built a multi-pronged narrative, strong cloud momentum, growing Gemini traction, and a stabilizing ad business.
THE NUMBERS TO WATCH
Metric |
Expected |
YoY Change |
| EPS | $2.58 | +20% |
| Revenue (Total) | $94.7B | +16% |
| Google Properties Revenue | $72.98B | +13.1% |
| Google Search & Other Revenue | $61.27B | +13.4% |
| YouTube Ads Revenue | $11.82B | +12.9% |
| Google Advertising Revenue (Total) | $80.97B | +11.8% |
| Google Cloud Revenue | $16.25B | +35.9% |
| Google Network Revenue | $7.80B | -1.9% |
| Traffic Acquisition Costs (TAC) | $16.18B | vs $14.85B last year |
| Headcount | 191,102 | vs 183,323 in Q4 '24 |
Metric |
Expected |
YoY Change |
| EPS | Expected: $2.58 |
YoY Change: +20% |
| Revenue (Total) | Expected: $94.7B |
YoY Change: +16% |
| Google Properties Revenue | Expected: $72.98B |
YoY Change: +13.1% |
| Google Search & Other Revenue | Expected: $61.27B |
YoY Change: +13.4% |
| YouTube Ads Revenue | Expected: $11.82B |
YoY Change: +12.9% |
| Google Advertising Revenue (Total) | Expected: $80.97B |
YoY Change: +11.8% |
| Google Cloud Revenue | Expected: $16.25B |
YoY Change: +35.9% |
| Google Network Revenue | Expected: $7.80B |
YoY Change: -1.9% |
| Traffic Acquisition Costs (TAC) | Expected: $16.18B |
YoY Change: vs $14.85B last year |
| Headcount | Expected: 191,102 |
YoY Change: vs 183,323 in Q4 '24 |
Source: Refinitiv, Zacks
ESTIMATE REVISIONS: A SOFTENING TONE
EPS forecasts have dipped 0.4% in the last 30 days, suggesting a dial back expectations as valuation pressure builds. While still reflecting healthy growth, this mild revision may temper near-term upside unless results come in well above consensus.
THE 3 KEY WATCHPOINTS THIS QUARTER
Google Cloud Backlog & Margin Expansion
- With Q3 backlog reaching $155B, investors are looking for updates on conversion velocity and 2026 revenue confidence.
- Cloud margins will also be a key focal point, especially after strong outperformance last quarter.
AI Monetization Signals
- Watch for mentions of Gemini adoption, enterprise wins, or integration into core products like Search and Workspace.
- Any traction here may help justify the multi-billion CapEx spend on infrastructure.
CapEx & FCF Outlook for 2026
- Analysts want to know if heavy AI investment is peaking.
- A softer CapEx guide could signal a free cash flow inflection, supporting multiple expansion in H2.
SEGMENT TRENDS TO WATCH
- Search & YouTube are expected to show stable double-digit growth, driven by robust ad demand.
- Google Cloud remains the fastest-growing segment - expect +35.9% YoY - and will likely be the main driver of revenue upside.
- Google Network is the only segment expected to contract, highlighting ongoing pressure from mobile ad ecosystem changes.
VALUATION SNAPSHOT: HOW DOES GOOGL STACK UP?
Even after its massive 2025 run, Alphabet still sits near the mid-range of mega-cap tech valuations - but only if its AI monetization and Cloud margin expansion continue.
Even after its massive 2025 run, Alphabet still sits near the mid-range of mega-cap tech valuations - but only if its AI monetization and Cloud margin expansion continue.
| Identifier (RIC) | Company Name | EV / Revenue (SmartEstimate ®) (NTM) | EV / EBITDA (SmartEstimate ®) (NTM) | Price / EPS (SmartEstimate ®) (NTM) | Price / Cash Flow Per Share (SmartEstimate ®) (NTM) |
| GOOGL.O | Alphabet Inc | 8.55 | 18.03 | 29.18 | 21.29 |
| META.OQ | Meta Platforms Inc | 6.94 | 12.50 | 23.42 | 13.16 |
| AMZN.OQ | Amazon.com Inc | 3.12 | 11.80 | 28.37 | 13.91 |
| SNAP.N | Snap Inc | 1.81 | 11.56 | 12.32 | 11.09 |
| NFLX.OQ | Netflix Inc | 6.85 | 20.33 | 25.70 | 27.13 |
| EBAY.OQ | eBay Inc | 3.83 | 12.15 | 15.22 | 12.37 |
| MSFT.OQ | Microsoft Corp | 8.84 | 14.56 | 23.59 | 18.65 |
| CRM.N | Salesforce Inc | 4.21 | 9.93 | 15.88 | 12.43 |
Company Name |
Identifier (RIC) |
EV / Revenue (SmartEstimate ®) (NTM) |
EV / EBITDA (SmartEstimate ®) (NTM) |
Price / EPS (SmartEstimate ®) (NTM) |
Price / Cash Flow Per Share (SmartEstimate ®) (NTM) |
| Alphabet Inc | Identifier (RIC): GOOGL.O |
EV / Revenue (NTM): 8.55 |
EV / EBITDA (NTM): 18.03 |
Price / EPS (NTM): 29.18 |
Price / Cash Flow (NTM): 21.29 |
| Meta Platforms Inc | Identifier (RIC): META.OQ |
EV / Revenue (NTM): 6.94 |
EV / EBITDA (NTM): 12.50 |
Price / EPS (NTM): 23.42 |
Price / Cash Flow (NTM): 13.16 |
| Amazon.com Inc | Identifier (RIC): AMZN.OQ |
EV / Revenue (NTM): 3.12 |
EV / EBITDA (NTM): 11.80 |
Price / EPS (NTM): 28.37 |
Price / Cash Flow (NTM): 13.91 |
| Snap Inc | Identifier (RIC): SNAP.N |
EV / Revenue (NTM): 1.81 |
EV / EBITDA (NTM): 11.56 |
Price / EPS (NTM): 12.32 |
Price / Cash Flow (NTM): 11.09 |
| Netflix Inc | Identifier (RIC): NFLX.OQ |
EV / Revenue (NTM): 6.85 |
EV / EBITDA (NTM): 20.33 |
Price / EPS (NTM): 25.70 |
Price / Cash Flow (NTM): 27.13 |
| eBay Inc | Identifier (RIC): EBAY.OQ |
EV / Revenue (NTM): 3.83 |
EV / EBITDA (NTM): 12.15 |
Price / EPS (NTM): 15.22 |
Price / Cash Flow (NTM): 12.37 |
| Microsoft Corp | Identifier (RIC): MSFT.OQ |
EV / Revenue (NTM): 8.84 |
EV / EBITDA (NTM): 14.56 |
Price / EPS (NTM): 23.59 |
Price / Cash Flow (NTM): 18.65 |
| Salesforce Inc | Identifier (RIC): CRM.N |
EV / Revenue (NTM): 4.21 |
EV / EBITDA (NTM): 9.93 |
Price / EPS (NTM): 15.88 |
Price / Cash Flow (NTM): 12.43 |
Source: Refinitiv
THE BOTTOM LINE
Alphabet’s Q4 earnings are a look into the viability of AI monetization, the strength of Cloud, and discipline on spending in 2026.
The company’s track record of beating estimates is solid, but with expectations high and the stock near all-time highs, any weakness in margin or forward guidance could trigger a pullback.
For Traders:
Technically, the stock is still respecting a multi-month uptrend, and is now testing the lower boundary of that trendline, setting up a potential breakout or breakdown scenario depending on how earnings land.
For Investors:
Still one of the most dominant enabler of enterprise-scale AI adoption; but valuation leaves little room for error. A strong print + soft CapEx guide may be the catalyst for a renewed leg higher.
RISK DISCLOSURE
Earnings releases can drive significant volatility. This article is for informational purposes only and is not investment advice. Consider your individual risk profile before trading.
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