Alphabet Q4 Earnings Preview: Can Gemini 3 & AI Chips Turn Into Real Money?

Last year, Google's stock price surged over 60%, becoming the brightest star in the Mag7, fueled by the phenomenal success of the Gemini 3 and Nano Banana Pro, as well as the TPU. In Q1-Q3 of 2025, its non-GAAP net profit growth rates were 30.16%, -18.37%, and 24.06%, respectively, with the stock price outpacing profit growth, indicating that market capitalization expansion was primarily driven by valuation increases. Google urgently needs to demonstrate that AI will generate tangible revenue.

Google recently integrated its Chrome browser with Gemini 3, enabling AI-powered access to core applications like Gmail and Google Workspace through the Connected Apps architecture. This move will further transform AI from a simple chat function into a productive tool capable of performing actual tasks.

– Alphabet's revenue is expected to be $111.45B for 2025 Q4, up 15.53% YOY;

– EPS is estimated to be $2.639, up 22.76% YOY.

Last week's financial report from Meta showed an increase in advertising industry unit prices, which has guiding significance for both Google and Amazon's advertising businesses. As AI-optimized advertising recommendation algorithms become more precise, advertisers achieve better placement results, naturally making them willing to pay higher unit prices.

For the advertising business, investors can pay attention to indicators such as the growth rate of ad clicks, the growth rate of cost per click (CPC), and the profit margin of the advertising business.

As can be seen from the Google growth heatmap below, most of Google's businesses were in an expansion phase last quarter, especially Google Search, the mainstay of revenue, which reached its highest growth rate in this cycle.

Besides the advertising business, investors should also pay attention to the fact that Google Services includes the subsegment of Google Subscriptions, Platforms and Devices. The growth of Gemini's personal subscriptions may be reflected in this business area.

Investors will also closely watch whether Google Cloud can maintain its high growth rate.

Bloomberg data shows that the market expects Google Cloud's growth rate to reach 35.4% in Q4, faster than the previous quarter's 33.5%. In addition, Alphabet's capital expenditures (CapEx) will also affect the revenue expectations of the entire chip sector, especially its partner Broadcom.

The segment’s operating margin reached 23.7% last quarter, significantly higher than 17.1% in Q3 2024. Economies of scale have allowed Alphabet's cloud business profit growth to outpace its revenue growth.

Alphabet's put/call ratio is 0.85, which is above its median level. The shares currently have an implied volatility (IV) of 40.28%, which is at the 83th percentile historically.

– Potential Positive Catalysts: Gemini integration with Google's existing ecosystem

– Risks to Monitor: The risk of excessive CapEx; Gemini's slow commercialization

– Valuation: Alphabet's current PE (Price-to-Earnings) ratio is 33.37 times, which is at the 94th percentile of its historical range over the past five years.

Also check out moomoo's past insights on Alphabet: