Alphabet(US:GOOGL) Huachuang Securities·2026-02-09 00:30Investment Rating - The report assigns a strong buy rating for Alphabet, anticipating a performance exceeding the benchmark index by over 20% in the next six months [47]. Core Insights - Alphabet's FY2025Q4 performance was impressive, with total revenue reaching $113.8 billion, a year-over-year increase of 18% (17% at constant currency), and an annual revenue of $402.8 billion, up 15% [3][8]. - The operating profit margin for FY2025Q4 was 31.6%, with operating profit at $35.9 billion and net profit at $34.5 billion, reflecting a 30% year-over-year increase [3][8]. - The company expects FY2026Q1 consolidated revenue to benefit from currency fluctuations, with projected capital expenditures between $175 billion and $185 billion, primarily directed towards AI computing, data centers, hardware, and renewable energy [12]. Revenue Breakdown Google Services - Revenue from Google Services reached $95.9 billion, a 14% year-over-year increase, accounting for over 84% of total revenue [4][9]. - Key contributors included search and other advertising ($63.1 billion, +17% YoY), YouTube advertising ($11.4 billion, +9% YoY), and subscription/platform and device revenue ($13.6 billion, +17% YoY) [9]. - The operating profit for this segment grew by 22% to $40.1 billion, with a profit margin of 41.9% [9]. Google Cloud - Google Cloud revenue was $17.7 billion, a significant 48% year-over-year increase, with an annualized revenue exceeding $70 billion [10]. - The growth was driven by accelerated new customer acquisition, large order increases, and strong demand for enterprise AI products, with nearly 75% of customers utilizing vertically optimized AI [10]. - Operating profit for Google Cloud doubled to $5.3 billion, with a profit margin of 30.1% [10]. Other Businesses - Other businesses generated $370 million in revenue but incurred an operating loss of $3.6 billion, primarily due to a $2.1 billion stock option compensation expense related to Waymo [11]. - Waymo completed its largest financing round, raising $16 billion, with significant advancements in autonomous driving services [11]. Strategic Focus - AI is positioned as the core growth engine, with infrastructure integration of NVIDIA GPUs and proprietary seventh-generation TPUs [5]. - The company is enhancing its enterprise AI services, deepening partnerships with leading SaaS companies like Salesforce and Shopify [5].