Picky, picky. That's my take on investors selling Alphabet (GOOG 1.68%) (GOOGL 1.66%) stock after the company reported stellar fourth-quarter results on Wednesday, Feb. 4, 2026.
The good news about the Google parent's surging revenue and profits was overshadowed by its higher projected spending on artificial intelligence (AI). Alphabet's share price fell moderately on Thursday amid concerns about higher capital expenditures.
Is the selling warranted? I don't think so. Here are five reasons to buy this AI stock on the dip.
NASDAQ: GOOGL
Key Data Points
1. AI investments are already delivering returns
Anyone wondering whether Alphabet's AI investments are paying off need only look at the company's Q4 numbers. CFO Anat Ashkenazi stated in the earnings call, "The investments we have been making in AI are already translating into strong performance across the business as you've seen in our financial results." Yes, they are.
While Alphabet plans to spend even more on AI this year ($175 billion to $185 billion), I expect the additional investment will also deliver solid returns. It's essential to keep in mind where the money is going, including supporting cutting-edge research by Google DeepMind, improving the user experience to boost advertisers' return on investment, and meeting soaring demand for cloud services. It would be a mistake if management weren't investing more in these areas.
2. Google Cloud is booming
Speaking of soaring demand for cloud services, Alphabet's Google Cloud business is booming. Revenue for the unit skyrocketed by 48% year over year in the fourth quarter to $17.7 billion. Google Cloud ended 2025 with an annual revenue run rate of $70 billion.
Is Google Cloud's growth in jeopardy of slowing anytime soon? I don't think so. Alphabet reported a cloud backlog of $240 billion at the end of the year, more than double the level from the end of 2024 and up 55% from the end of the third quarter of 2025.
The business is also more profitable than ever. Google Cloud's operating margin jumped from 17.5% in 2024 Q4 to 30.1% in the recent quarter.
3. Google Search growth is poised to accelerate
Some doomsayers proclaimed that generative AI would be an existential threat to Google Search after OpenAI launched ChatGPT in late 2022. Those predictions have fallen flat on their face, to put it mildly.
Image source: Getty Images.
Google Search's revenue increased 16.7% year over year in Q4 to $63.1 billion. Alphabet CEO Sundar Pichai said in the quarterly update this week that Google Search usage in Q4 was higher than ever. I suspect that Google Search's growth is even poised to accelerate as, in Pichai's words, "AI continues to drive an expansionary moment."
4. Alphabet's financials are outstanding
It takes money to make money. And Alphabet has a lot of money. The company ended 2025 with a cash position of $126.8 billion. Its annual revenue topped $400 billion for the first time last year.
Increasing AI capital expenditures won't cramp Alphabet's style, either. The tech giant generated $24.6 billion of free cash flow in the fourth quarter alone. Alphabet can afford additional AI-related spending.
5. Two growth opportunities ahead
Google Cloud and Google Search remain the most important growth drivers for Alphabet. However, I think investors should keep an eye on two other growth opportunities.
First, Apple (AAPL 1.93%) is using Google's Gemini to develop its next-generation foundation AI models. Its next version of the Siri AI assistant will integrate with Gemini. Neither Apple nor Alphabet have revealed the financial terms of their collaboration. However, I expect the partnership with Apple will significantly boost Alphabet's revenue going forward.
Second, Alphabet owns several businesses known as its "Other Bets." Self-driving car technology company Waymo is the most promising member of the group right now. The robotaxi market has tremendous potential -- and Waymo is the leader in this market.
