Alphabet's Q4 Earnings Focus: AI and Ad Growth Key Factors

• Analysts expect $16.18 billion in Google Cloud revenue, $11.84 billion in YouTube advertising, and $16.20 billion in traffic acquisition costs
• Google's Gemini AI deal with Apple reaches 2.5 billion active devices, while Waymo recently closed a $16 billion funding round valuing the unit at $126 billion
• Google must double AI serving capacity every six months to meet demand and acquired data center company Intersect for $4.75 billion to support infrastructure expansion

Alphabet Q4 Earnings Preview: AI Expansion and Ad Revenue in Focus

Key Expectations:

Alphabet reports Q4 earnings Wednesday after market close. Analysts expect revenue of $111.43 billion, with Google Cloud projected at $16.18 billion and YouTube advertising at $11.84 billion. Traffic acquisition costs are estimated at $16.20 billion.

Stock Performance:

Alphabet shares have surged over 70% in the past six months, making it one of 2025's top performers. The company recently joined Apple, Microsoft, and Nvidia in the exclusive $4 trillion market cap club.

Major AI Developments:

Wall Street awaits details on Google's partnership with Apple to integrate Gemini AI models into Siri and other Apple features, potentially reaching 2.5 billion active devices. In November, Google launched Veo 2 models and seventh-generation tensor processing units. The company must double its AI serving capacity every six months to meet demand, according to infrastructure leadership.

In January, Google introduced "Personal Intelligence," an AI agent connecting Gmail and Google Photos for personalized responses, and unveiled the Universal Commerce Protocol for AI-powered shopping.

Strategic Moves:

Alphabet acquired data center company Intersect for $4.75 billion in December. Google DeepMind licensed Hume AI's CEO and engineers to enhance Gemini's voice capabilities. The company also filed an appeal against a federal ruling on its search monopoly, potentially delaying remedies.

Waymo Expansion:

Alphabet's autonomous vehicle unit achieved significant milestones, serving 15 million trips across five U.S. cities and launching Miami operations. This week, Waymo secured $16 billion in funding at a $126 billion valuation, demonstrating strong investor confidence in autonomous technology.