Alphabet Q4 2025 earnings preview: will cloud and AI justify the $4 trillion valuation?

When will Alphabet report its latest earnings?

Alphabet is set to report its fourth-quarter (Q4) 2025 results on Thursday, 5 February at 8.00am AEDT, after United States (US) market closes. Investors are closely monitoring whether its sustained rally, driven by artificial intelligence (AI), has more room to run or whether expectations have become too stretched.

Alphabet’s stock has surged approximately 70% over the past year, significantly outperforming the S&P 500. While much attention has been on generative AI leaders like NVIDIA and OpenAI, Alphabet has built a compelling narrative with strong cloud momentum, growing traction in its Gemini platform, and a stabilising advertising business.

Alphabet's performance against the S&P 500

Estimate revisions: a softening tone

Earnings per share (EPS) forecasts have dipped 0.4% in the last 30 days, suggesting tempered expectations as valuation pressures increase. While growth remains strong, this slight revision may limit near-term upside unless results significantly exceed consensus expectations.

Financial expectations for Q4 2025

​Key areas to watch

Google cloud backlog and margin expansion

With third-quarter (Q3) backlog reaching $155 billion, investors are eager for updates on conversion velocity and confidence in 2026 revenue. Cloud margins will be a critical focus, particularly after last quarter's strong performance.

AI monetisation signals

Look for mentions of Gemini adoption, enterprise wins, or integration into core products like Search and Workspace. Success here could justify the multi-billion-dollar capital expenditure (capex) on infrastructure.

Capex and free cash flow outlook for 2026

Analysts are keen to know if heavy AI investment is peaking. A softer capex guide could signal a positive  free cash flow inflection, supporting multiple expansions in the second half (H2).

Segment trends to watch

• Search and YouTube: are expected to show stable double-digit growth, driven by robust ad demand.
• Google cloud: remains the fastest-growing segment with an expected +35.9% YoY increase and will likely drive revenue growth.
• Google network: is the only segment expected to contract, reflecting ongoing pressures from changes in the mobile ad ecosystem.

Valuation snapshot: how does Alphabet stack up?

Even after its massive 2025 run, Alphabet remains in the mid-range of mega-cap tech valuations, contingent on continued AI monetisation and cloud margin expansion.

Mega-cap tech valuations

Bottom line

Alphabet’s Q4 earnings are a look into the viability of AI monetisation, 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.