alphabetGOOGL is riding on the strong outlook for Google Cloud, which will account for 14.6% of GOOGL’s revenue in 2025. Google Cloud’s revenue increased 35.8% from its 2025 reported amount to $58.71 billion. Revenue benefited from growth in Google Cloud Platform (GCP) across core products, AI infrastructure, and generative AI (Gen AI) solutions. Cloud backlog grew 55% QoQ, reaching $240 billion by the end of 2025. The AI push is expected to improve Google Cloud’s prospects in the short term.
Alphabet’s AI infrastructure expansion is helping it win enterprise customers. The outlook for GCP remains strong, driven by strong demand for enterprise AI infrastructure including TPUs (led by 7th generation Ironwood) and NVIDIA’s latest GPUs, enterprise AI solutions driven by demand for the latest Gemini and other AI models, and other services such as cybersecurity and data analytics. Google Cloud is also benefiting from strong adoption of Gen AI with leading models such as Gemini, Imagen, Veo, Chirp, and Lyria. In the fourth quarter of 2025, revenue from products built on Gen AI models increased nearly 400% year over year.
At the end of Q4 2025, Alphabet’s cloud customers doubled compared to Q1 2025. The number of transactions valued at $1 billion exceeded the previous three years combined, reflecting increased customer commitment. 75% of Google Cloud customers use Alphabet’s vertically optimized AI, from chips to models, AI platforms, and enterprise AI agents, delivering superior performance, quality, security, and cost efficiency. Alphabet’s cloud AI accelerators address the needs of leading Frontier AI Labs, capital markets firms such as Citadel Securities, enterprises such as Mercedes-Benz, and governments for high-performance computing applications.
Google Cloud’s revenue is expected to grow further due to the push towards security. Adding Wiz (purchased, expected to close in 2026) to Google Cloud will give us a competitive edge against: AmazonAMZN and microsoftMSFT in the field of cloud computing. Accelerating investment bodes well for GOOGL’s outlook. Alphabet expects capital spending in 2026 to be between $175 billion and $185 billion.
GOOGL faces tough competition in cloud space
According to Synergy Research Group data, Amazon’s share of the global cloud infrastructure market reached 28% in Q4 2025, ahead of Microsoft’s Azure platform at 21% and Google Cloud’s 14%.
Amazon is spending heavily to enhance its Amazon Web Services (AWS) infrastructure to support AI workloads and expanding data center capacity. Amazon has committed $200 billion in capital spending in 2026, the majority of which will go toward AWS infrastructure. In the fourth quarter of 2025, AWS grew 24%, the fastest pace in 13 quarters, and its backlog increased 40% to $244 billion.
Revenues from Microsoft Azure and other cloud services accelerated 38% in constant currency (cc) in Q2 2026, with management believing that AI-related demand contributed significantly. Microsoft Cloud revenue reached $51.5 billion, up 24% on a cc basis. In Q3 FY26, revenue growth for Azure and other cloud services is expected to reach approximately 37%-38% cc.
GOOGL stock performance, valuation and estimation
Alphabet shares have gained 85.7% in the following twelve months, outpacing the broader Zacks Computer & Technology sector’s return of 30.1%.
Google stock outperforms sector
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GOOGL stock is trading at a premium, trading at a trailing 12-month price/sales ratio of 9.01x, compared to the broader sector’s ratio of 6.43x. The value score for the alphabet is D.
GOOGL rating
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The Zacks Consensus Estimate for fiscal 2026 earnings is set at $11.58 per share, moving 4.5% over the past 30 days and suggesting growth of 7.1% from the reported fiscal 2025 number.
Alphabet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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