Buy, Sell or Hold the Stock?
- Finance
ThePostMaster- 0
- 10 minutes read
Alphabet GOOGL shares have dropped 7% post fourth-quarter 2025 results reported on Feb. 4. The drop can be attributed to investor skepticism over GOOGL’s ability to monetize its AI-infused services, given the huge capital expenditure guidance, which is now pegged between $175 billion and $185 billion for 2026. Most of this spending is marked for building AI and cloud infrastructure, including data centers, chips and servers for Gemini and cloud growth. Although Alphabet generates considerable cash flow ($164.71 billion on a trailing 12-month basis at the end of fourth-quarter 2025), this steep increase in capital expenditure is expected squeeze free cash flow ($73.27 billion on a trailing 12-month basis at the end of fourth-quarter 2025).
So, what should investors do with GOOGL stock? Let’s dig deep to find out.
Google continues to dominate the Search business with a roughly 89.82% share, followed by Microsoft’s MSFT Bing, with a 4.45% share, per the latest data from StatCounter. The company has been actively embedding AI, especially within Search, to enhance user experience, provide better AI-focused features and consequently improve ad performance. The company shipped more than 250 product launches within AI Mode and AI Overviews in the fourth quarter of 2025, and the company integrated Gemini 3 directly into AI Mode in Search.
Upgradation of AI Overviews to Gemini 3 is offering users a best-in-class AI response at the top of the search results page. GOOGL has made the transition from an AI overview to a conversation in AI Mode completely seamless. This is driving up user experience as well as engagement. In the U.S., Alphabet saw daily AI Mode queries per user double since launch, and AI Overviews continue to perform very well. Queries in AI Mode are three times longer than traditional searches. The company is also seeing sessions becoming more conversational, with a significant portion of queries in AI Mode now leading to a follow-up question. Circle to Search is also now available on over 580 million Android devices.
Google Cloud is benefiting from Gen AI adoption due to leading models, including Gemini, Imagen, Veo, Chirp and Lyria. More than 120,000 enterprises use Gemini, including AI companies like Lovable and Open Evidence and global enterprises like Airbus and Honeywell. Moreover, 95% of the top 20 and over 80% of the top 100 SaaS companies use Gemini, including Salesforce and Shopify. Alphabet’s expanding AI infrastructure is helping it win enterprise clients. GCP’s prospects remain robust, driven by strong demand for enterprise AI infrastructure, including TPUs and GPUs, enterprise AI solutions driven by demand for the latest Gemini and other AI models, and other services, including cybersecurity and data analytics.
