Google: Revenue Is Growing, but the Stock Is Falling

Alphabet (GOOGL) once again delivered a strong report: earnings per share in Q4 came in at $2.82 (+31% year over year), while revenue rose to $113.8 billion (+18%). On paper, everything looks confident – the company continues to expand even in a mature market.

The Cloud segment was especially impressive: growth of +47%, with backlog reaching $240 billion. This means demand for cloud services is already locked in through contracts for years ahead, and Google is gradually turning Cloud into the second key engine of its business.

The AI direction is also scaling rapidly. Gemini has already reached around 750 million users. That is a massive number, showing that AI is becoming part of Google’s ecosystem at the level of Search, YouTube, Android, and enterprise services. The company is essentially building a new platform designed to maintain leadership in an era when the world’s search model is changing.

But despite these numbers, the stock fell nearly 4.6%, dropping to around $317. At first glance, this seems illogical: the company is growing faster than expected, yet investors are selling. However, the logic of the stock market is simple – the market looks not only at current results, but also at how expensive the next stage of growth will be.

First, YouTube slightly missed expectations on advertising revenue. Even giants have weak spots. This quarter, YouTube’s ad income came in below analysts’ forecasts. For the market, this is a signal that advertising growth may be less устойчивым than hoped, and ads remain Alphabet’s main source of income. When the largest segment shows even a small slowdown, investors start to нервничать.

Second, investors were встревожены by the scale of future spending. Alphabet stated that CapEx in 2026 could reach $175-185 billion. These are enormous sums that will go toward building data centers, purchasing chips, and expanding AI and cloud infrastructure. The market understands: to win the AI race, spending must be as aggressive as Microsoft, Amazon, and the Nvidia ecosystem. But at the same time, it means future profits will be partly “eaten up” by the investment cycle.

Another point often overlooked by retail investors: when a company builds infrastructure, costs do not disappear after equipment is purchased. Depreciation begins to rise, which reduces free cash flow – the metric the market sees as the key indicator of financial health. Alphabet becomes stronger, but temporarily less “cash-rich” in investors’ eyes.

Fundamentally, Alphabet remains one of the strongest companies in the world: Cloud is accelerating, AI services are growing, and institutional support remains intact. The current correction reflects fear of spending rather than real business problems. The market wanted a perfect quarter with no weak spots, but got a slightly weaker YouTube, massive investment plans, and pressure on cash flow.

The result is a classic reaction: “sell the news,” even if the news is good. Despite the short-term pullback, the fundamental picture remains strong.

Alphabet today is a company that:

• accelerates cloud business growth
• actively monetizes AI services
• expands infrastructure for future demand
• maintains institutional support (A- accumulation rating)

This is not a story about problems. This is a story about an expensive transition into a new technological era. Google is not a company losing ground – it is a company paying the price of leadership. AI is not built for free. Data centers do not appear out of thin air. And the market is simply reminding investors of an old truth: the future is expensive, even when it is profitable.