Alphabet’s core growth drivers remain its AI initiatives and Google Cloud. The company’s AI backlog swelled to $155 billion as of late 2025, up 82% year-over-year, driven by enterprise commitments to Gemini integration and custom TPU deployments. Meanwhile, Google Cloud revenue climbed to $15.15 billion in Q3 2025, marking a 34% annual increase, and benefitted from a growing roster of Fortune 500 clients adopting both Google’s GPUs and its proprietary tensor processing units for large-scale AI workloads.

Google Cloud’s profitability has surged alongside its top-line growth. The division reported net income of $3.59 billion in Q3 2025, up 85% from the same period in 2024, yielding a 23.7% margin. For the full year 2025, Cloud is on track to generate approximately $12.4 billion in operating income—doubling 2024’s result—and consensus forecasts project net profits could reach nearly $20 billion by year-end 2026 if current trends moderate to a 60% annual growth rate.

Despite commanding a leading position across cloud and AI infrastructure, Alphabet trades at a forward enterprise-value-to-EBITDA ratio below many peers. With Google Cloud’s contribution to group profitability set to rise from roughly 8% of total profits in 2024 to over 15% by 2026, investors may find the stock’s multiple attractive ahead of its next earnings release. Analysts anticipate a potential upside surprise to both revenue and margin guidance when Alphabet reports full-year results, underpinned by further margin expansion in Cloud and cost leverage across data-center operations.