Alphabet’s Google has subverted expectations by showing impressive artificial growth, offering competition with OpenAI. A year ago, investors believed that Google was lagging behind its rivals in the AI race, and punished its stock, according to a Reuters report.
Alphabet executives showed confidence in the company’s post-earnings call on Wednesday, the first since it released the Gemini 3 model. The Gemini 3 model had impressed users, and helped Google get a leg-up in the AI race.
While Alphabet did not name its rival, its confidence in messaging shows that investments in AI are paying off for the company. That served as Alphabet’s justification to potentially double its capital expenditures in 2026 – to between $175 billion and $185 billion – as a result of massive investments into AI computing capacity.
Alphabet’s prepared remarks about AI in 2025 had focused on product usage and AI revenues generated specifically via its cloud-computing unit.
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“Overall, we’re seeing our AI investments and infrastructure drive revenue and growth across the board,” CEO Sundar Pichai said.
Google’s confidence regarding its AI-fueled revenue is backed by growth in both its consumer and enterprise businesses. Pichai said that the Gemini app which competes with OpenAI’s ChatGPT, exceeded 750 million monthly active users at the end of the December quarter, up from 650 million at the end of the prior period. That still trails ChatGPT, which OpenAI CEO Sam Altman said in October had crossed 800 million weekly active users.
“We are also seeing significantly higher engagement per user, especially since the launch of Gemini 3,” Pichai said.
Gemini 3 has also been integrated into “AI Mode” in Google’s search engine and powers Google’s enterprise version of Gemini, which Pichai said on the call had reached 8 million paying licenses.
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Investors were initially alarmed by Google’s surging capex forecast. While this initially sent the stock down by 6% in after-hours trading, revenue was up by 48% in the December quarter after a strong showing from its cloud unit.
An AI-powered boost across the rest of the business managed to convince investors that Google’s AI bets were paying off.
Google recently forged an unlikely alliance with rival Apple over AI, with Apple agreeing to use Google’s Gemini to power its Siri assistant. This comes as a major change in strategy for the iPhone maker, which usually develops its own core technology.
Under the partnership, Google’s Gemini models are expected to handle more complex, generative AI tasks within Siri, such as advanced conversational responses, content generation and contextual understanding.