Alphabet outperformed Wall Street’s expectations in the fourth quarter, reporting $2.82 in adjusted earnings per share on $113.82 billion in revenue. Earnings beat estimates by $0.18, while revenue exceeded predictions by $2.34 billion.
Initially, the market reacted negatively to Alphabet’s projected capital expenditures of $175 billion to $185 billion. However, shares later rose by 3% in after-hours trading. This uptick was reassuring after the NASDAQ 100 dropped by 1.77% during the regular session, marking its second straight day of losses.
Alphabet’s net income climbed 30% from last year to $34.46 billion, and revenue grew by 18%. Google Cloud revenue soared 48% year-over-year to $17.7 billion. Meanwhile, the Services segment also increased by 14% to $95.5 billion.
Search revenue rose by 17%, and YouTube ad revenue grew by 9%. However, the Google Ad Network saw a slight decline of 2%. For the first time ever, Alphabet’s total annual revenue surpassed $400 billion, driven by advancements in AI and the rollout of Gemini 3, which improved their services.
Despite a rocky start to the week for tech, Alphabet’s strong results are seen as a positive sign. The earnings and revenue beats provide essential support for the sector, especially after the January jobs report was stronger than expected, which unsettled the market. This performance indicates that solid fundamentals can outweigh broader economic concerns.
As a result of this report, we anticipate that traders will take bullish positions in GOOGL over the next few weeks. The initial decline due to high capital expenditure guidance was quickly reversed, highlighting investor confidence in Alphabet’s long-term AI strategy. Open interest for GOOGL call options expiring in March surged over 20% in overnight trading, signaling strong directional interest.
The 48% growth in Google Cloud stands out and is likely to attract significant attention. This figure shines even more when compared to Microsoft’s recent report, which showed a solid but less impressive 34% growth in its Azure segment. This suggests Alphabet is capturing a larger share of this important growth market.
This positive news from Alphabet should boost the entire NASDAQ 100. We observed a similar trend in the second quarter of 2025, where strong earnings from major companies helped the index break out of a multi-week consolidation phase. Traders will likely use this momentum to buy calls on the QQQ, betting on a broader recovery in tech.
The success of Gemini is now clear, with 750 million monthly active users demonstrating that the AI product strategy works. Just last year, the monetization of generative AI was still a topic of debate. These results decisively show the value of the massive capital investment, making longer-dated bullish options strategies appealing.
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