Key Points

• Google’s AI advancements, including AI overviews, have helped maintain its nearly 90% search market share.

• Analysts project Alphabet’s fourth-quarter earnings-per-share at $2.63, with revenue increasing by 15% to $111.3 billion.

• Google Cloud sales are anticipated to reach $16.2 billion, a 35% increase, with an operating margin rising to 22.7%.

A year ago, Alphabet’s core property, Google Search, looked like it was in trouble. Despite a decade of well-funded research on artificial intelligence, Google was still surprised by the capabilities of ChatGPT when it debuted in November 2022.

Google struggled to match AI models coming out of start-ups OpenAI and Anthropic, and web search was changing. Moreover, the company faced regulatory pressures in the U.S. and around the world.

But Google is in a much stronger position as Alphabet prepares to report its fourth quarter Wednesday afternoon.

AI overviews, an AI summary of search results at the top of traditional Google search, have proven to be very effective in maintaining the near 90% market share Google has in search. The Gemini 3 AI models, released in November, finally put Google on par with OpenAI and Anthropic. Google also developed some momentum for its homegrown AI chips, the TPU, with a large Anthropic partnership. And one of Google’s antitrust trials, U.S. v. Google, concluded with punishments less onerous than feared.

The doom and gloom of early 2025 has faded. In the past six months, Alphabet stock is up 81% and sentiment has shifted.

On average, Wall Street analysts are expecting earnings-per-share of $2.63, up from $2.15 last year. Revenue is seen at $111.3 billion, rising by 15%.

About three-quarters of Alphabet’s sales come from advertising, and it is always the foundation of companywide performance. Ad revenue is expected to grow by 13%, led by search. But in the absence of real issues there, all eyes will be on the sales and expense growth at Google Cloud.

The part of the AI investment boom that is already paying off is at cloud providers such as Google, which build AI data centers and rent out the servers. The first side of this is the massive investments Google is making into expanding capacity to meet demand. Google spent about $90 billion in 2025 capital expenditures and investors are likely to hear Google’s first estimate for 2026 capex during the fourth-quarter earnings call. Analysts expect about $116 billion.

Microsoft already spent $72 billion in capex in the first half of its fiscal year, and Meta, which has no cloud unit, last week projected $115 billion to $135 billion in 2026 capex.

But the other side of all that expense is growing revenue and operating margins at Google Cloud. Sales are expected at $16.2 billion, up 35% year-over-year, with an operating margin of 22.7%, up from 17.5%.

Alphabet still faces the worst competitive and regulatory environment it has seen, but at least for now it keeps chugging along.