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Alphabet's AI Dominance: Earnings to Prove Worth
4 Feb
Summary
- Alphabet leads AI, with strong cloud and chip businesses.
- Stock nears Nvidia's value; valuation at 18-year high.
- Earnings expected to show 17% revenue and 23% EPS growth.
Alphabet is increasingly recognized as a leader across major artificial intelligence sectors. Its financial results, due after market close on Wednesday, February 4, 2026, are anticipated to validate this reputation and sustain stock momentum. The tech giant has experienced a significant turnaround, now boasting a highly regarded AI model, advanced semiconductors, and a booming cloud-computing division.
This strong performance has propelled Alphabet's share price to an all-time high, placing it close to surpassing Nvidia in global market capitalization. The company's valuation has also reached its highest level in 18 years, leading to exceptionally high expectations for its upcoming earnings report. Revenue is projected to grow by 17%, with earnings per share expected to increase by 23%.
Key growth drivers include its latest Gemini AI model, released in November 2025, and its Tensor Processing Unit (TPU) semiconductors, which are a significant selling point for Google Cloud. The company's broader strategy involving TPUs and cloud services enhances its differentiation in the market. Beyond AI, Alphabet's thriving businesses include YouTube and its autonomous driving unit, Waymo, which recently raised $16 billion.
However, concerns linger regarding Alphabet's lofty valuation against its projected 2026 capital expenditures, which are estimated to rise by approximately 28% to $117 billion. The stock's trading at about 28 times estimated earnings, its highest since early 2008. Investors are closely watching to see if Alphabet's growth narrative can justify these expenditures, similar to Meta Platforms' recent performance, rather than mirroring Microsoft's slowing cloud growth.
