Resilience in Its Core Business Powers Alphabet’s (GOOG) Performance

Core Insights - Baron Durable Advantage Fund returned 2.6% in Q4 2025, closely matching the S&P 500 Index's return of 2.7% [1] - For the full year 2025, the Fund achieved a return of 16.6%, slightly below the S&P 500 Index's 17.9% and the Morningstar Large Growth Category average of 16.1% [1] - The Fund's investment strategy for 2026 focuses on high-quality, large-cap companies with strong competitive advantages amid geopolitical changes, regulatory trends, and advancements in artificial intelligence [1] Company Highlights: Alphabet Inc. (NASDAQ:GOOG) - Alphabet Inc. is a significant contributor to the Fund's performance, with its stock closing at $318.63 per share and a market capitalization of $3.85 trillion as of February 10, 2026 [2] - The stock experienced a one-month return of -4.63% but gained 72.98% over the last 52 weeks [2] - In Q4 2025, Alphabet's shares rose 28.9%, with a yearly increase of 65.5%, driven by strong performance in core businesses and growth in Google Cloud and Other Bets [3] - Alphabet's revenues grew 15% in constant currency, while EPS increased by 35% year-on-year [3] - Despite competition from AI rivals like ChatGPT, both Search and YouTube achieved double-digit revenue growth year-on-year [3] - Google Search paid clicks increased compared to the previous year, and the latest AI assistant, Gemini, is leading in AI capabilities [3] - Cloud revenue growth accelerated to 34% year-over-year, fueled by demand for AI cloud services, with a record number of large deals over $1 billion signed [3] - The number of monthly AI tokens processed in September increased 20 times year-on-year, indicating strong demand [3] - Long-term prospects for Alphabet include opportunities in autonomous driving through Waymo and partnerships in agentic commerce [3]