Alphabet (GOOG, GOOGL) is scheduled to announce its 2025 fourth-quarter earnings on February 4. Over the past year, its stock price has surged by more than 68%. As the earnings release draws near, the market is focused on whether the company still holds investment value.
Alphabet has successfully alleviated market concerns about its search engine business being eroded by AI chatbots. In the third quarter of 2025, Google Search revenue grew nearly 15% year-over-year, reaching approximately $56.6 billion. The company’s AI-powered search experiences, such as AI Overviews and AI Mode, are expanding the use cases for search, particularly among younger users. Among these, AI Mode, as a conversational search assistant, supports 40 languages and boasts over 75 million daily active users. Additionally, Alphabet launched AI Max in September 2025, aimed at helping advertisers optimize ad delivery and acquire new customers, which is expected to enhance digital advertising conversion rates and create new revenue opportunities.
Alphabet’s large language model, Gemini, is rapidly progressing in its commercialization efforts. The model has been integrated into Google Workspace and Google Cloud. Recently, Apple (AAPL) entered into a multi-year agreement with Alphabet to use the Gemini model in a revamped version of the Siri virtual assistant, expected to launch by the end of 2026. This move is anticipated to bring Alphabet licensing revenue from Apple’s over 2 billion devices.
Google Cloud serves as a significant growth engine for the company, with third-quarter revenue growing 34% year-over-year to $15.2 billion. As of the end of the quarter, its backlog surged 82% to $155 billion, highlighting robust future revenue potential. Morgan Stanley analyst Brian Nowak predicts that Google Cloud’s 2025 revenue will reach around $58 billion, with a potential year-over-year growth of 44% in 2026. If more large-scale cloud deals are secured, this growth rate could rise to 50%.
In the streaming media space, YouTube continues to maintain its leading position in U.S. market watch time. Through a multi-year content partnership with the BBC and its first-ever live broadcast of an NFL game in September 2025, which attracted over 19 million viewers, its content advantages and platform standing have been further solidified. YouTube’s revenue sources include digital advertising and subscription services, showing a clear trend toward diversification. Moreover, the company maintains a healthy financial position, holding approximately $98.5 billion in cash as of the end of the third quarter.
Investing in Alphabet also requires attention to associated risks. In January 2026, a U.S. federal judge ruled that Google must face a consumer antitrust lawsuit accusing it of illegally monopolizing the online search market, indicating the company is under stricter legal scrutiny. Meanwhile, Alphabet expects its 2025 capital expenditures to range between $91 billion and $93 billion, with 2026 expenditures potentially being even higher. While these investments are primarily directed toward expanding data centers to support AI development, if the commercialization of AI falls short of expectations, it could impact free cash flow in the short term.
The company’s current price-to-earnings ratio is approximately 30 times expected earnings, reflecting a relatively high valuation. However, considering its sustained competitiveness in search, cloud computing, and video, this valuation appears somewhat justified. Although the current timing may not be optimal for buying, investors might consider a moderate position ahead of the earnings report. Strong earnings performance could drive the stock price significantly higher in the coming months.
Waymo, Alphabet’s autonomous driving division, recently completed a $16 billion funding round, achieving a post-money valuation of $126 billion, highlighting its rapid growth as a leader in the autonomous taxi sector. This round was led by Sequoia Capital, DST Global, and Dragoneer Investment Group. Parent company Google also participated in this round.
Waymo’s co-CEO stated that the new funds will be used to accelerate development and global expansion while maintaining safety standards. Currently, Waymo offers fully autonomous paid ride services in about six U.S. cities, operating through its own app and in partnership with Uber (UBER). The company plans to rapidly expand across the United States this year and enter the U.K. market. In comparison, competitors such as Tesla (TSLA) and Amazon’s (AMZN) Zoox remain in limited pilot stages, and the overall economic feasibility of the industry has yet to be validated.
Some analysts note that although Waymo completed approximately 20 million ride services in 2025, there is still room to scale its operations, with higher per-vehicle costs being a current limitation. The new funding is expected to deepen partnerships with automakers, expand the fleet size, and advance global recruitment. Currently, Waymo provides over 400,000 paid rides per week.
