3 big things to look out for in Google's Q4 earnings

Google has been on an impressive growth trajectory, but the big question remains: can it sustain this momentum? As Alphabet prepares to unveil its fourth-quarter earnings on Wednesday, all eyes will be on several critical factors including AI investments, cloud service growth, and a significant partnership with Apple. Investors are particularly eager to see how Google's capital expenditures will measure up. The company previously projected its capex for 2025 to be between $91 and $93 billion, with expectations of a 'substantial' increase for 2026, as indicated by finance chief Anat Ashkenazi. The earnings call is anticipated to shed more light on these financial forecasts. Notably, this earnings season has shown that investors are becoming more tolerant of hefty AI-related spending, provided that the company's core business remains robust. A central point of interest is how Google's search advertising is performing in light of competition from AI rivals like OpenAI. Is Alphabet's foundational revenue stream continuing to thrive, or is it facing challenges? Analysts from Bernstein have expressed optimism, suggesting that Google likely experienced an uptick in query volume during Q4. They highlighted that growth in paid clicks for Google in the United States was the highest observed since early 2021, signaling a positive trend. Meanwhile, Google's cloud services are emerging as a significant player, competing intensively with Amazon and Microsoft to establish a strong infrastructure and secure vital AI contracts. In the previous quarter, Google reported a 34% year-over-year increase in new cloud customers, with expectations for continued growth fueled by AI sales and its recent partnership with Anthropic. This earnings report will be the first since Google and Apple announced their collaboration, which involves integrating Google's Gemini AI models into Apple's Siri assistant. Many questions remain about this deal, including the extent of Google's financial gain, the use of query data for training Gemini, and whether Apple will utilize Google's data centers and TPU chips. Clarity on these points is anticipated during the upcoming earnings call.