Hey Archie
Google indexes everything. Images. Alt text for images. Images and their alt text. If you take a look at the cached version of a page you can see all HTML content indexed. You can see the cached version of a page by prefixing the URL with info: in a google search (or in the address bar in Chrome).
info:www.example.co.uk
I suspect that is not what you are asking though and rather you want to know whether Google uses the alt text when indexing and ranking a page. Again, I would answer that Google uses (or at least tries to use) everything. They will review the context (the page), the name of the image, the alt text and anything else that may lend context (inbound links, anchors, linking pages etc).
Googles Image Publishing Guidelines page is a good read:
https://support.google.com/webmasters/answer/114016?hl=en
Key takeaways from that page being:
- image name
- alt text
- on page context
- linking page context
Which of course is not to say that all of these attributes are used in all cases. I would suspect they are examined but given the general lack of useful anchors and well named images they are used when possible.
Which of course opens up a great big opportunity for those where images are a useful source of inbound traffic and competitors are using lazy CMS image names like image_z343wd.jpg and default "product image" or blank anchors.
Always difficult to answer a question without context as so many moving parts but certainly hope that helps.
Take care
Marcus