Google stock’s post-earnings dip is a ‘gift’ for investors: find out more

Alphabet (NASDAQ: GOOGL) shares experienced a rare post-earnings “hiccup” on Wednesday, as investors grappled with a massive spike in projected capital expenditures and a slight miss in YouTube advertising revenue.

Despite the initial knee-jerk selloff, the underlying fundamentals of the search giant remain not just intact, but historically strong.

Alphabet comfortably cleared the bar on both the top and bottom lines, posting an EPS of $2.82 and revenue of $113.83 billion, proving that the core Google machine is firing on all cylinders.

For savvy investors, the post-earnings dip in Google stock looks less like a fundamental breakdown and more like high-quality entry point into a firm that’s aggressively securing its throne in the “AI-dominated future” of the internet.

Google stock: a story of cloud dominance and search resilience

While the market focused on a minor YouTube shortfall, the “real story” of the Q4 report was the astronomical growth in Google Cloud, which raked in $17.66 billion – shattering the $16.18 billion estimate.

This wasn’t just a beat; it was a statement of intent. The Cloud segment’s growth is increasingly fuelled by generative AI adoption, with enterprise customers flocking to the Gemini platform.

Meanwhile, core Search revenue continued to defy skeptics who feared AI disruption, proving that “AI Overviews” are actually enhancing user engagement rather than cannibalizing it – essentially making GOOGL stock all the more attractive as a long-term holding.

The discrepancy between $2.82 EPS and the $2.63 estimate highlights Alphabet’s uncanny ability to drive efficiency even as it scales with operational margin benefiting from widespread integration of custom AI hardware like its in-house TPUs.

Why capex surge is actually a positive for GOOGL shares

The headline that spooked the herd was Alphabet’s 2026 capital expenditure guidance, which is set to nearly double 2025 levels at a range of $175 to $185 billion.

However, viewing this as a negative is a misunderstanding of the current tech arms race. As CEO Sundar Pichai has noted, the “risk of under-investing is far greater than the risk of over-investing” in AI infrastructure.

This massive spend is not a drain; it is a defensive and offensive moat. By doubling down on data centers and custom chips, Google is ensuring it remains the “landlord” of the AI era.

Jefferies analysts have already looked past the sticker shock, recently raising their price target on Google shares to $400, arguing these investments are the bedrock for the next decade of double-digit growth.

How to play Alphabet Inc after Q4 earnings

The slight miss in YouTube advertising – $11.38 billion versus the expected $11.84 billion – is being treated by bulls as a mere timing issue rather than a structural decline.

In fact, many analysts point out that YouTube’s “sell-through” of Shorts is accelerating and that the platform is seeing record engagement in its subscription services (YouTube Premium and TV), which aren’t fully captured in the “advertising” headline.

With recent upgrades from Raymond James to “strong buy” and a consensus that GOOGL shares remain the most reasonably valued among “Magnificent Seven” names (trading at a significant discount to peers on a PEG basis), the current volatility is likely a gift.

Between the Apple Gemini partnership and the rollout of Gemini 4.0 on the horizon, the catalysts for continued upside in 2026 are already lining up.

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