Alphabet, the parent company of Google, is navigating a complex landscape of strong financial performance alongside significant investment and increased regulatory scrutiny. While the tech giant exceeded expectations in its fourth-quarter 2025 earnings, concerns about substantial capital expenditures and a latest European Union antitrust investigation are weighing on investor sentiment, impacting the company’s stock price.
The company’s recent earnings report revealed a profit per share of $2.82, surpassing the consensus estimate of $2.57 and revenue of $113.83 billion. This positive performance is particularly notable in Google Cloud, which saw a 48% increase in revenue to $17.66 billion during the quarter. The cloud division’s backlog also grew by 55% compared to the previous quarter, reaching $240 billion, signaling continued strong demand from enterprise customers. Alphabet’s full-year revenue reached $402.8 billion, with a profit of $10.81 per share, representing a 17% increase in revenue year-over-year.
Significant Investment in AI Fuels Uncertainty
Underpinning the current market reaction is Alphabet’s ambitious plan to significantly increase capital expenditures. The company intends to ramp up investments to between $175 and $185 billion in 2026, primarily focused on artificial intelligence computing capacity and cloud infrastructure. This substantial financial commitment, while aimed at future growth, is causing apprehension among investors who are concerned about the potential impact on free cash flow, particularly as other major tech companies are also making massive investments in AI infrastructure.
The market’s concern is reflected in the stock’s recent performance. Over the past 30 days, Alphabet’s stock has declined by 22.17%, according to Börse Express.
EU Antitrust Probe Adds to Regulatory Pressure
Adding to the challenges, Alphabet is facing renewed regulatory scrutiny from the European Union. On February 12th, the EU Commission launched a formal antitrust investigation into Google’s practices regarding search ad auctions. According to reports from Bloomberg and Reuters, the Commission suspects that the “clearing price” in these auctions may be artificially inflated, potentially harming advertisers. This investigation builds upon existing EU proceedings against Alphabet, which has faced billions of dollars in fines in the past.
Gemini and Waymo Continue to Advance
Despite these headwinds, Alphabet continues to make progress on its key strategic initiatives. The company’s AI platform, Gemini, now boasts 750 million monthly active users, with over 10 billion tokens processed per minute through its API. Alphabet also reported a 78% reduction in Gemini’s serving costs in 2025 through model optimizations.
Meanwhile, Waymo, Alphabet’s autonomous driving unit, is rolling out its sixth-generation autonomous driving system and plans to expand into new cities, including Tokyo and London.
The company’s recent bond issuance—including a rare 100-year Sterling bond—further illustrates its commitment to funding these ambitious projects. Alphabet placed bonds totaling approximately $31.5 billion in multiple currencies, with the Century Bond tranche (worth £1 billion) reportedly attracting strong interest with orders reaching around £9.5 billion, according to Reuters and Bloomberg.
The current situation presents a clear tension for Alphabet. The company demonstrates strong operational momentum, but its stock is sensitive to factors that are hard to predict in the short term: the capital intensity of AI investments and the outcome of the EU’s antitrust investigation.
Investors will be closely watching for updates on the EU investigation and further details on Alphabet’s capital expenditure plans. The next major checkpoint for investors will be Alphabet’s first-quarter 2026 earnings report, expected in April, which will provide further insight into the impact of these factors on the company’s financial performance.
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