AI Central to Google's US$185bn Spending Plans
Alphabet’s Q4 results for fiscal 2025 offer a clear view of how Google is executing its AI strategy.
In an earnings call, CEO Sundar Pichai detailed how Gemini, infrastructure and scale are shaping the company’s core businesses: "It was a tremendous quarter for Alphabet. The launch of Gemini 3 was a major milestone and we have great momentum.”
Alphabet's annual revenue exceeded US$400bn for the first time in 2025. Search revenues grew 17%, YouTube annual revenue surpassed US$60bn and Cloud accelerated to 48% growth with an annual run rate of more than US$70bn.
Sundar consistently framed the results as evidence that Google’s AI investments are reinforcing its business model, adding: "Overall, we’re seeing our AI investments and infrastructure drive revenue growth across the board."
Full-stack AI strategy built for scale
At the heart of Google's approach is what Sundar describes as a full-stack AI strategy, meaning the company controls all layers of AI development, from hardware and model design to deployment in products.
“Our unrivalled infrastructure serves as the bedrock for our AI stack,” he said, pointing to its compute options, which range from NVIDIA GPUs to Google’s Tensor Processing Units (TPUs) – custom chips designed specifically for AI workloads and large-scale machine learning.
"As we scale, we’re getting dramatically more efficient," Sundar continued.
The CEO highlighted the impact of vertical integration, where Google owns both its hardware and software systems: “We were able to lower Gemini serving unit costs by 78% over 2025 through model optimisations, efficiency and utilisation improvements."
Gemini 3 is now central to Google’s products and platform roadmap, achieving the “fastest adoption of any model in our history,” according to Sundar. Since its mid-November 2025 launch, Gemini 3 Pro has “consistently processed three times as many daily tokens on average as 2.5 Pro".
From models to products
Consumer adoption of AI platforms is growing alongside technical scale.
Sundar noted: “Our Gemini App now has over 750 million monthly active users. We’re also seeing significantly higher engagement per user, especially since the launch of Gemini 3 in December.”
Rather than treating Gemini as a standalone product, Google integrates it across its services. Sundar said: "We’re shipping innovation at scale to bring helpful AI features to people everywhere.”
In January alone, Google introduced multiple AI-first updates. Personal Intelligence launched in AI Mode, new AI features appeared in Gmail, Chrome was reimagined as an “AI-first, agentic browser” and Project Genie now enables users to create interactive worlds in real time.
Reinforcing search and Cloud
Search remains a key focus for Google, with usage growing in Q4. Sundar said it received “more usage in Q4 than ever before, as AI continues to drive an expansionary moment".
Google completes more than 250 launches across AI Mode and AI Overviews in the quarter, "proving to be more helpful and driving a greater usage", said Sundar.
Elsewhere, Cloud continues to deliver strong momentum. The earnings call noted that new customer velocity doubled compared to Q1, with Cloud backlog reaching US$240bn by the end of December.
Looking ahead, Sundar emphasised continued investment to meet demand: "To meet customer demand and capitalise on the growing opportunities ahead of us, our 2026 CapEx investments are anticipated to be in the range of US$175bn to US$185bn.
"2025 was a fantastic year for the company. We’re really well positioned going into 2026."
