Alphabet shares declined Thursday as Wall Street digested a massive spending plan and an overall artificial intelligence sentiment shift. Investment experts widely believe now is not the time to sell this stock.

Alphabet reported fourth-quarter financial results after the stock market closed on Thursday. The quarter looked strong as earnings and revenue rose more than Wall Street expected. Google Cloud revenue of $17.7 billion jumped 48% from the previous year, which was ahead of estimates.

Alphabet stock still dropped 0.5% on Thursday to $331.25.

Expectations were high coming into the report. Alphabet shares have risen 73% since this time last year. The stock trades at 27.8 times earnings expected over the next 12-months, which is higher than its five-year average of 21.7 times.

Investors also seemed stuck on Google's latest massive spending numbers. 2026 capital expenditures are expected to be between $175 billion and $185 billion. That would be a major jump from 2025 capex of $91.4 billion.

Meta Platforms also provided a huge spending outlook, but that didn't elicit the same response from investors. The Facebook parent said on Jan. 28 that it expects 2026 capex to be between $115 billion to $135 billion, compared with last year's $72 billion. The stock jumped 10% on Jan. 29.

John Belton, portfolio manager at Gabelli Funds, told Barron's that he thinks one reason that Alphabet's stock didn't mirror Meta's rise is because Meta provided financial guidance, which Alphabet doesn't do.

"That gives investors a lot of visibility and also speaks to the confidence they [Meta] have in pulling untapped monetization levers in their business," Belton said.

The concerns surrounding Alphabet's spending are being magnified by an overall change in how the market is looking at AI investments. Tech stocks have taken a hit this week as investor concerns regarding how AI could impact software and information technology intensified. Some investors are also more broadly worried that tech companies won't see returns fast enough on these massive investments.

The combination of these worries was beating down Alphabet stock. The company needs to prove to its shareholders that these investments will bear fruit.

Belton thinks they already are.

"I think the market is broadly coming to the view that digital advertising is a direct beneficiary of AI -- no question about that," he said. "Google and Meta are the two digital advertising giants. So if you're in a market where investors are concerned about the ROI [return on investment] on AI capex, capital is going to gravitate towards Google and Meta."

Wall Street experts are also pointing to cloud growth as a sign that Alphabet is able to monetize its AI efforts. Cloud backlog grew 55% since the last quarter, now at $240 billion.

"Cloud rev growth in 4Q25 was a standout, driven by accelerating demand, improving profitability, and a backlog that implies a multi-year revenue runway," Needham analyst Laura Martin wrote on Thursday. She raised her price target to $400 from $330 and maintained a Buy rating on the stock.

Several other analysts raised their price targets after earnings, despite the initial stock reaction. Truist Securities analyst Youssef Squali raised his price target to $385 from $350 while maintaining a Buy rating.

The higher Capex guide for 2026 is "not surprising" and is "justified as long as the company continues to grow revenue & profitability higher for longer and supports buybacks & dividends," Squali wrote on Wednesday night.

Search -- Google's bread and butter -- was another highlight in the quarter. Search ad revenue rose more than analysts expected. This is an important metric for investors to track following concerns that competing large language models, like OpenAI's ChatGPT, were going to take away crucial market share from Google Search. Analysts attribute Google's search success to the company's implementation of AI products, like Overviews and AI Mode.

Overall, this was a strong showing from Google, which continued to highlight that demand for AI isn't going anywhere. The spending is intimidating, but those who think the stock has more room to run argue that this is just the beginning of Alphabet positioning itself to benefit from the growing demand for AI.

"Accelerating Search momentum, a rapidly expanding Cloud backlog, and tangible Gemini adoption suggest that Google is successfully leading the transition to an AI-native economy, and this print further reinforces our view that the stock should be a core holding in large-cap tech portfolios," Canaccord Genuity analyst Maria Ripps wrote on Wednesday. She rose her price target to $415 from $390 and maintained a Buy rating.