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ETFs to Watch as Alphabet Reports Q4 Earnings

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Key Takeaways

  • Alphabet delivered strong Q4 earnings, but elevated 2026 capex expectation overshadowed the upbeat results.
  • The doubling of 2026 capex underscores Alphabet's aggressive AI-led investment push.
  • Alphabet's Cloud revenues jumped 48% and operating income surged 153%.

Alphabet (GOOGL - Free Report) came up with fourth-quarter 2025 earnings on Feb. 4 after market close. Earnings of $2.82 per share surpassed the Zacks Consensus Estimate of $2.57 by 9.73%. This marked an improvement of 31.16% from earnings of $2.15 per share recorded in the same period last year.

Market reaction was unfavorable, with GOOGL shares falling about 3% in extended trading and 2.63% in pre-market trading on Feb. 5. Per CNBC, the tech giant forecast 2026 capex of $175 to $185 billion, with the upper end implying more than double capex from last year, a sharp increase that appears to have unsettled investors.

According to Reuters, the projected rise in 2026 capital expenditure marks a continuation of the tech giant’s aggressive investment strategy to expand compute capacity and reinforce its AI ambitions.Even as Alphabet highlights meaningful progress across its AI initiatives, investors remain increasingly wary of the payoffs from elevated AI spending.

Snapshot of Q4 Earnings

The tech giant posted revenues of $97.23 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate of $94.79 billion by 2.58%. This marked a substantial increase of 19.12% from the year-ago quarter.

Alphabet’s net income for the quarter saw a substantial surge of about 30.0% from the year-ago quarter to $34.46 billion. The tech giant’s net income for 2025 reached $132.17 billion, marking an increase of 32.01% from 2024.

The company’s operating income for the quarter was $35.94 billion, which marked an increase of 16.02% from the year-ago quarter. Alphabet’s operating income for 2025 increased 14.81% from 2024, reaching $129.04 billion.

Segment Snapshots

Fourth-quarter revenues from Google advertising reached $82.28 billion, up 13.56% from the year-ago quarter. Revenues from Google Search & other, which reached $63.07 billion in the fourth quarter, marked a rise of 16.73% from $54.03 billion in the year-ago quarter.

Revenues from Google Services for the quarter increased 13.99% from the year-ago quarter, reaching $95.86 billion. Operating income from the segment reached $40.13 billion for the quarter ended December 2025, marking an increase of 22.22%from the prior-year figure of $32.84 billion.

Alphabet’s Google Cloud business witnessed a substantial surge, with operating income increasing to $5.31 billion, an impressive 153.45% increase from the prior-year figure of $2.09 billion. Revenues from the Cloud segment also witnessed a substantial rise of 47.75% year over year to $17.66 billion,driven by growth in Google Cloud Platform (GCP) across core products, AI Infrastructure and enterprise AI Solutions.

Alphabet’s Stock Outlook

Alphabet currently has an average brokerage recommendation (ABR) of 1.27 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations made by 56 brokerage firms. The current ABR compares to an ABR of 1.29 a month ago based on 56 recommendations.

Of the 56 recommendations deriving the current ABR, 47 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 83.93% and 5.36% of all recommendations. A month ago, Strong Buy made up 82.14%, while Buy represented 7.14%, indicating that the majority of the analysts remain bullish.

Based on short-term price targets offered by 53 analysts, the average price target for Alphabet comes to $347.02, ranging from a low of $220.00 to a high of $400.00. The average price target represents an increase of 4.19% from the last closing price of $333.04 (as of market close on Feb. 4).

ETFs to Explore

Here, we have highlighted ETFs with heavy exposure to Alphabet.

Global X PureCap MSCI Communication Services ETF (GXPC - Free Report) has an exposure of 29.38% in GOOGL.

Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) has an exposure of 14.75% in GOOGL.

Vanguard Communication Services ETF (VOX - Free Report) has an exposure of 13.98% in GOOGL.

iShares Global Comm Services ETF (IXP - Free Report) has an exposure of 12.74% in GOOGL.

Communication Services Select Sector SPDR Fund (XLC - Free Report) has an exposure of 11.45% in GOOGL.

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