Google Cloud Is Turning AI Demand Into Profits. Should You Buy the Stock?
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By John Ballard – Feb 10, 2026 at 11:23PM ESTKey PointsGoogle Cloud revenue increased 48% year over year in the most recent quarter, while operating income reached $5.3 billion.The company will have to spend aggressively to keep up with demand.Alphabet stock is trading at 29 times 2026 earnings estimates.These 10 Stocks Could Mint the Next Wave of Millionaires ›NASDAQ: GOOGLAlphabetMarket Cap$3.9TToday's Changeangle-down(-1.77%) $5.74Current Price$318.58Price as of February 10, 2026 at 4:00 PM ETAlphabet is experiencing strong demand for its AI cloud services.Alphabet (GOOG 1.79%) (GOOGL 1.77%) stock made a monster comeback in 2025, rocketing 107% after the sharp sell-off in April, and the real growth story is happening in Google Cloud. Enterprise demand for artificial intelligence (AI) tools is off the charts, and Alphabet is not only reporting strong revenue growth, but also turning this demand into soaring profits. Google Cloud's operating income jumped 154% year over year in the fourth quarter, contributing to the company's double-digit earnings growth over the past year. Here's what investors should know before deciding whether to buy Google stock now. Image source: Getty Images. Google Cloud is turning into a real growth catalyst for the company, particularly on the bottom line. Cloud revenue increased by 48% year over year -- a noticeable acceleration over the previous quarter's 34% increase -- with operating income reaching $5.3 billion in the fourth quarter. However, Google Cloud still contributes just 15% of Alphabet's total operating profit. This is still primarily a digital advertising business, with that making up 72% of the company's fourth-quarter revenue. ExpandNASDAQ: GOOGLAlphabetToday's Change(-1.77%) $-5.74Current Price$318.58Key Data PointsMarket Cap$3.9TDay's Range$314.61 - $321.6752wk Range$140.53 - $349.00Volume39MAvg Vol38MGross Margin59.68%Dividend Yield0.26% Investors should also be prepared for a dip in the share price. Wall Street doesn't like anything that causes uncertainty to near-term earnings visibility. Alphabet is planning to double capital spending in 2026, and this could pressure the share price in the near term. Still, Alphabet is directing more investment into its AI infrastructure. AI is the future, and the companies that own hard assets -- data centers and chips -- will ultimately capture much of the profit from this technology, as Alphabet is already demonstrating. Google stock is not as cheap as it was a year ago, but investors shouldn't be afraid to buy it at these higher share prices. The stock is trading at 28 times 2026 earnings estimates -- still reasonable for a company of this quality. Read NextFeb 10, 2026 •By Geoffrey Seiler4 Things Every Alphabet Investor Needs to KnowFeb 10, 2026 •By Sean WilliamsThis Is the AI and Quantum Computing Stock Billionaires Want to Own (and It's Not Nvidia)Feb 10, 2026 •By Lyle DalyThis Could Be One of the Best Tech Stocks to Hold for the Next 10 YearsFeb 9, 2026 •By Chris NeigerWaymo Just Raised Another $16 Billion.
Does That Make Alphabet the Ultimate AI Stock for 2026?Feb 9, 2026 •By Neil PatelGot $5,000? 2 Tech Stocks to Buy and Hold for the Long TermFeb 9, 2026 •By Keithen DruryBest AI Stock to Buy Right Now: Alphabet vs. MicrosoftAbout the AuthorJohn Ballard has been a contributing writer at The Motley Fool since 2016, covering consumer goods and technology stocks. He holds a bachelor’s degree in business administration with a focus in real estate finance from the University of Arkansas at Little Rock.TMFRazorbackStocks MentionedAlphabetNASDAQ: GOOGL$318.57 (1.77%) $5.75AlphabetNASDAQ: GOOG$318.59 (1.79%) $5.81*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.