Core Insights - Alphabet's fourth-quarter 2025 earnings per share (EPS) of $2.82 exceeded the Zacks Consensus Estimate by 9.73% and represented a 31.2% increase year over year [1] Revenue Performance - Total revenues reached $113.8 billion, marking an 18% year-over-year increase (17% at constant currency) [2] - Net revenues, excluding traffic acquisition costs (TAC), were $97.23 billion, surpassing the consensus estimate by 2.58% and increasing 19.1% year over year [2] - TAC amounted to $16.59 billion, growing 11.8% year over year [2] Segment Analysis - Google Services revenues rose 14% year over year to $95.86 billion, accounting for 84.2% of total revenues and beating the Zacks Consensus Estimate by 1.31% [3] - Google Cloud revenues surged 47.8% year over year to $17.66 billion, representing 15.5% of total revenues for the quarter and exceeding the consensus estimate by 8.70% [3] - Search and other revenues increased 16.7% year over year to $63.07 billion, surpassing the consensus estimate by 2.94% [4] - YouTube's advertising revenues improved 8.7% year over year to $11.38 billion, although it missed the consensus mark by 3.70% [5] - Google advertising revenues increased 13.6% year over year to $82.28 billion, accounting for 72.3% of total revenues and beating the consensus mark by 1.62% [6] - Google subscriptions, platforms, and devices revenues were $13.57 billion, up 16.7% year over year, but missed the consensus mark by 0.49% [7] Cloud and AI Adoption - Google Cloud ended the quarter with a backlog of $240 billion, up 55% sequentially, with nearly 75% of customers utilizing AI products [8] - Revenues from products built on Alphabet's generative AI models grew over 400% year over year, indicating strong adoption [10] Operating Performance - Fourth-quarter costs and operating expenses were $77.89 billion, up 18.9% year over year, with an operating margin of 31.6%, contracting 50 basis points year over year [12] - Google Services' operating margin expanded 280 basis points year over year to 41.9% [12] Financial Position - As of December 31, 2025, cash, cash equivalents, and marketable securities totaled $1.26 billion, up from $98.5 billion as of September 30, 2025 [14] - Long-term debt increased to $46.54 billion as of December 31, 2025, compared to $21.61 billion as of September 30, 2025 [14] - Alphabet generated $52.4 billion in cash from operations in the fourth quarter, with capital expenditures of $27.85 billion, resulting in a free cash flow of $24.55 billion [15] Capital Expenditure Guidance - For 2026, Alphabet expects capital expenditures to range between $175 billion and $185 billion, indicating a significant increase [16]

Financial Data and Key Metrics Changes - Alphabet's annual revenues exceeded $400 billion for the first time, with Q4 consolidated revenues reaching $113.8 billion, up 18% year-over-year [4][29] - Net income increased by 30% to $34.5 billion, and earnings per share rose by 31% to $2.82 [31] - Operating income increased by 16% to $35.9 billion, with an operating margin of 31.6% [31] Business Line Data and Key Metrics Changes - Google Services revenues increased by 14% to $95.9 billion, driven by a 17% increase in Search and Other revenues [32] - YouTube advertising revenues grew by 9% to $11.4 billion, primarily due to direct response advertising [32] - Google Cloud revenue accelerated by 48% to $17.7 billion, with significant growth in enterprise AI products [34] Market Data and Key Metrics Changes - Google Cloud's backlog increased by 55% quarter-over-quarter to $240 billion, reflecting strong demand for AI products [4][35] - The number of new customer acquisitions in Google Cloud doubled compared to Q1, with larger customer commitments also increasing [12][34] - YouTube's annual revenue surpassed $60 billion across ads and subscriptions, indicating strong market performance [65] Company Strategy and Development Direction - The company is focusing on AI investments, with anticipated CapEx for 2026 in the range of $175 billion to $185 billion to support AI compute capacity and infrastructure [5][39] - The launch of the Universal Commerce Protocol aims to enhance product discovery and improve user experience across various platforms [9][80] - Continued integration of AI capabilities into products and services is a key strategic focus, with significant investments in AI infrastructure and talent [6][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing momentum in business performance, particularly in AI and cloud services, despite supply chain constraints [38][77] - The company is committed to driving efficiencies while ramping up investments to meet extraordinary demand for AI capabilities [50][77] - Management highlighted the importance of maintaining a healthy financial position while pursuing growth opportunities [76] Other Important Information - The company reported a $2.1 billion stock-based compensation charge related to Waymo's valuation increase [30] - Record operating cash flow of $52.4 billion in Q4 and $164.7 billion for the full year [31][32] - The company is collaborating with Apple as their preferred cloud provider to develop next-generation foundation models based on Gemini technology [15][26] Q&A Session Summary Question: Progress on agentic commerce products and YouTube integration - Management noted that 2025 was about laying the foundation for agentic commerce, with significant progress in coding and the launch of the Universal Commerce Protocol [44] - On YouTube, the integration of new content creation tools like Genie is expected to enhance creator experiences and engagement [46] Question: Addressing AI demand and operational efficiencies - Management acknowledged supply constraints but emphasized long-term planning to meet demand, with a focus on operational efficiencies across the organization [50][52] Question: Maintaining Gemini's position in the LLM frontier - Management expressed confidence in maintaining momentum through continuous innovation and integration of multimodal models [58] Question: YouTube ad revenue growth and SaaS pricing power - Management explained that YouTube's ad revenue growth was impacted by lapping strong election spending, but overall subscription growth remains strong [65] - Management highlighted that successful SaaS companies are leveraging Gemini to enhance product experiences and drive efficiency [68]

Group 1: Core Insights - Alphabet's Search business is leading the market with a 90.83% share, significantly ahead of competitors like Microsoft (4.03%) and others [1] - The introduction of AI Mode and AI Overviews is enhancing user engagement, with AI Mode now available in over 40 languages and boasting more than 75 million daily active users [1][2] - Google Cloud is benefiting from generative AI adoption, leveraging advanced models such as Gemini, Imagen, Veo, Chirp, and Lyria [1][9] Group 2: Product Enhancements - Alphabet is expanding Personal Intelligence in Google Search, allowing AI Pro and AI Ultra subscribers to connect Gmail and Google Photos securely to AI Mode [2] - The rollout of Gemini 3 as the default model for AI Overviews is aimed at improving user experience by enabling seamless transitions from quick answers to deeper discussions [3] - Google Trends has been redesigned to enhance the discovery of search trends, with new AI features aiding users in building travel plans and shopping conversationally [4] Group 3: Competitive Landscape - Microsoft is embedding AI capabilities across its product ecosystem, creating a competitive advantage through its investment in OpenAI and the integration of AI in Azure and Office 365 [5] - Amazon is also a significant competitor in the AI domain, enhancing its offerings through AI integration in its operations and AWS services [6] Group 4: Financial Performance - Alphabet's shares have increased by 71.2% over the past 12 months, outperforming the broader Zacks Computer and Technology sector, which returned 27.8% [7] - The stock is currently trading at a forward 12-month price/sales ratio of 10.2X, higher than the sector average of 7.44X, indicating a premium valuation [11] - The Zacks Consensus Estimate for 2026 earnings is $11.06 per share, reflecting a 4.6% growth from the fiscal 2025 estimate of $10.57 per share [12]

We are signing larger deals. We have signed more deals over $1 billion through Q3 this year than we did in the previous two years combined. As we scale, we are diversifying revenue.Today, 13 product lines are each at an annual run rate over $1 billion. We are deepening our relationships. Over 70% of existing Google Cloud customers use our AI products, including Bank OBV, Best Buy, and Fairpric Group.We are also the only cloud provider offering our own leading generative AI models including Gemini, Imagine, ...

Core Insights - Alphabet's third-quarter 2025 earnings per share (EPS) reached $2.87, exceeding the Zacks Consensus Estimate by 26.99% and reflecting a year-over-year increase of 35.4% [1] - Total revenues for the quarter amounted to $102.35 billion, marking a 16% year-over-year growth (15% at constant currency) [2] Revenue Breakdown - Net revenues, excluding total traffic acquisition costs (TAC), were $87.47 billion, surpassing the consensus estimate by 3% and increasing 17.3% year over year [2] - Google Services revenues rose 13.8% year over year to $87.05 billion, accounting for 85.1% of total revenues, beating the Zacks Consensus Estimate by 2.43% [3] - Google Cloud revenues surged 33.5% year over year to $15.16 billion, representing 14.8% of total revenues for the quarter and exceeding the consensus estimate by 3.25% [3] Advertising Performance - Search and other revenues increased 14.5% year over year to $56.57 billion, surpassing the Zacks Consensus Estimate by 2.58% [4] - YouTube's advertising revenues improved 15% year over year to $10.26 billion, beating the consensus mark by 2.31% [5] - Google advertising revenues grew 12.6% year over year to $74.18 billion, accounting for 85.2% of total revenues, and also exceeded the consensus mark by 2.3% [6] Cloud and AI Developments - Google Cloud ended the quarter with a backlog of $155 billion, up 46% sequentially, with a 34% year-over-year increase in new customers [8] - Revenues from products built on Alphabet's generative AI models grew over 200% year-over-year, indicating strong adoption [10] Operating and Financial Metrics - Total costs and operating expenses for the quarter were $71.12 billion, up 19% year over year, leading to an operating margin of 30.5%, which contracted 180 basis points year over year [11] - Alphabet's cash, cash equivalents, and marketable securities stood at $98.5 billion as of September 30, 2025, an increase from $95.15 billion as of June 30, 2025 [13] Capital Expenditure Guidance - For 2025, Alphabet raised its capital expenditure guidance to between $91 billion and $93 billion, up from the previous estimate of $85 billion [15]