To The Moon

Online search giant and ascendant AI services leader Alphabet Inc (tickers: $Alphabet(GOOG)$, $Alphabet(GOOGL)$ ) – better known as "Google" – released its Fiscal Year (FY) 2025 results on the 4th of February, a decidedly pivotal moment when investments in AI technology and returns from thereof are under heavy scrutiny in this market. Trends indicate that, on balance and relative to the overall mood prevalent in the market, it could best be described as either “so-so” or reassuring, depending on what investors are looking to find within the results.

Trend Analysis

Google's top and bottom lines show, i.e. revenue and diluted earnings per share (EPS) – are showing trends that have been consistent since 2023:

Google modestly bucked trends established in Q3 2025 – where growth was projected at 11% - to deliver 15% in Year-on-Year (YoY) growth. In a similar vein, diluted EPS rose from a projected trend of 32% growth as of Q3 2025 to 34% for FY 2025.

Advertising is its biggest revenue earner and had shown the most significant improvement among segments by going from the 7% growth projected as of Q3 2025 to 15% by the end of FY 2025, bringing FY results in line with the range of growth shown in FY terms since FY 2023. The cloud segment showed the second-best improvement within a single quarter by going from a projected 27% trend to 36% for the full year while subscriptions went from a projected 13% trend to 19%.

Now, advertising tends to be seasonal and the bulk of ad spends do tend to happen in Q4 of the calendar year, especially in the U.S., which has long accounted for nearly half of all revenue.

The Cloud segment – which essentially is the bedrock of the company’s AI offering – witnessed a 25% growth over FY 2024 to close out FY 2025 with a 15% share of revenue while advertising has witnessed a slow decline in revenue share while still accounting for nearly three-fourth of all revenue.

Juxtaposed with a nearly even and unchanging regional share of revenue contribution along with consistent 3-year trends in top and bottom line growth, Google remains a steady and stable company – which arguably might not fit in well with the ongoing sentiment in the market.

AI and Market Sentiment

On the 28th of January, Microsoft and Meta Platforms had reported the Q2 earnings for their FY 2026 and FY 2025 results respectively. The 29th of January went on to be one of the worst days in Microsoft’s stock history with a nearly 10% loss while Meta rose by approximately the same percentage. The difference was in messaging despite both companies registering growth: while Microsoft’s CFO Amy Hood argued that the company’s AI-relevant cloud segment’s result could have been higher if it had allocated more datacentre infrastructure to customers rather than prioritizing its in-house projects like Microsoft 365 Copilot, Meta’s CFO clearly laid out how its AI investments had proven to be directly beneficial to their core business: AI drove a 3.5% lift in ad clicks on Facebook, more than 1% gain in conversions on Instagram and a 24% increase in incremental conversions on the Meta AI business assistant in Q4 2025.

Meta’s “core” business is essentially the same as Google’s: advertising. In his letter to the shareholders, CEO Sundar Pichai dutifully pointed out that Google’s annual revenues exceeded $400 billion for the first time ever:

and was driven by impressive revenues in absolute terms from its YouTube and Cloud properties. However, as the trends indicated, this was well in line with overall growth the company has posted in the past few FYs, more or less expected and largely priced in already.

CEO Pichai also indicated several encouraging developments in the company’s AI segment:

• The latest iteration of its Large Language Model (LLM) Gemini 3 Pro has consistently processed three times as many daily tokens on average as its predecessor 2.5 Pro.

• More than eight million paid seats of its agentic AI platform for business Gemini Enterprise have been sold since its launch four months ago and employed in 2,800 companies such as BNY and Virgin Voyages, and serving customers including Wendy’s, Kroger and Woolworths Group.

• Gemini serving unit costs were lowered by 78% over 2025 through model optimizations, efficiency and utilization improvements

• New AI features were added to Gmail, its generative AI platform Veo has been updated, “Personal Intelligence in AI Mode” has been launched in Search, and a new open standard for agentic commerce, the Universal Commerce Protocol, was built alongside many retail industry leaders

But in contrast to Meta’s messaging, AI’s benefit to the company’s “core” doesn’t have explicit metrics yet, i.e. how its AI investments have been reducing costs or driving incremental revenues in its “core” segments. As the trends indicate, the company still remains even-keeled in growth. 

Of course, it’s pertinent to note that growth in R&D spending is nearly thrice that in the previous FY’s but larges surges aren’t altogether uncommon as the trends from FY 2021 through FY 2023 indicate. The big question the market seems to be asking: how much has this helped in delivering value?

Perhaps the answer to this will be available in FY 2026; the company is perhaps growing aware of the mood in the market when it comes to AI.

In Conclusion

CEO Pichai also indicated that customer demand for AI infrastructure and the company’s and capitalize on the growing opportunities ahead of us, the company’s 2026 CapEx investments are anticipated to be in the range of $175 to $185 billion.

In FY 2025, the company modestly (relatively speaking) upped its trend in purchases of plants and property – mostly signifying datacenter investments – by registering a 74% growth over FY 2024, wherein a 63% rise over the previous FY was registered.

The projected numbers for CapEx essentially constitute a 92-103% increase over FY 2025, if all of it were dedicated to building new infrastructure, which is unlikely: a portion of it would inevitably have to be allocated to replace or upgrade existing equipment such as GPUs, server racks, et al.

As it stands, the company issued senior unsecured notes for net proceeds of $24.8 billion to be used for general corporate usage. With net income already at $132 billion in FY 2025, the company is well-positioned to carry through on its commitments for CapEx.

Perhaps refreshingly to some, this earnings call didn’t feature any new hazy and circular “AI deals” that were all the rage through most of 2025. Rather than attempt to boost convictions with bombastic figures, the company seems to be resting on its considerable client/consumer reach at least for now.

The company is the picture of stability, which a certain subset of investors definitely looks for. However, the prevailing sentiment in the rest of market remains unanswered: what did all those circular “deals” and the hundreds of billions expended in development and infrastructure do for Google’s “core” business?

Buffeted between these two sets of the investing public and institutions, the company only delivered a modest rise in post-market trading on the 4th of January before mostly conceding those gains and subsequently running mostly flat to neutral in the pre-trading session so far on the 5th.

All in all, the company’s the very picture of stability but the market wants more: clarity.

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For broader articles that deep-dives into business and culture in Asia, visit asianomics.substack.com. Numerous new articles have been published that fully explain the rationale behind the commentary I’ve made in various European publications over the past few months. The latest one discusses the burgeoning number of military technology deals being enacted between Germany, France and India.