In Q4, Alphabet Inc. (GOOGL) reported revenues of $113.8 billion, surpassing Wall Street’s expectation of $111.4 billion, driven largely by a 48% increase in Google Cloud revenue to $17.7 billion. Despite strong earnings of $2.82 per share surpassing the $2.65 estimate, Alphabet’s stock fell by 5% due to concerns over projected AI spending, estimated to reach $175-$185 billion by 2026.
Amazon.com Inc. (AMZN) also reported strong Q4 results with $213.4 billion in revenue, above the expected $211.5 billion, and earnings of $1.95 per share. However, shares declined by 10% following the announcement of a projected $200 billion in capital expenditures by 2026, substantially exceeding earlier estimates of $146 billion. Analysts also noted lower-than-expected operating income forecasts for the upcoming quarter.
Both companies reflect a growing market focus on the costs of AI investment amid rising scrutiny on profitability, marking a shift toward an “AI Dislocation” phase where investors are increasingly selective about which firms will generate attractive returns on their substantial AI investments.
