Core Insights - Microsoft and Apple delivered mixed results, but Wall Street is urging tech giants to demonstrate that spending can drive growth, with Google and Amazon next in line to report [1] Meta Analysis - Meta's advertising revenue growth was a significant surprise, with expectations of 24% growth but actual guidance indicating an acceleration to over 33% [3] - The overall online advertising market is described as healthy, benefiting Meta and potentially impacting Google and Amazon positively [4] Google Insights - Google's Gemini is a key driver for the organization, enhancing search capabilities and contributing to query growth [5][6] - Google Cloud is expected to see accelerated revenue growth due to Gemini, which is being integrated across various Google products [7] - Alphabet's stock has increased by approximately 70% over the past year, indicating strong market performance [8] Amazon Insights - Amazon is viewed as a top pick, with AWS expected to add incremental capacity and accelerate growth, while the North America retail business is performing well [12][13] - The grocery and essentials segment is projected to grow, contributing to higher conversion rates and overall profitability [13][14] - Amazon's AI capabilities, while perceived as lagging behind competitors, are supported by their Nova model and proprietary chips, which are being developed to enhance AI offerings [16][18]

Alphabet (NASDAQ: GOOGL), the parent company of ubiquitous search engine Google, put the Magnificent in the Mag 7, ending 2025 as the top performer in the group, with a 66% return. This was a different outcome from what some expected earlier in the year, when concerns that Alphabet had fallen behind in the AI race weighed on its stock. While Alphabet certainly deserves its bouquets, the question now is whether this stellar 2025 performance can continue this year.What Drove Alphabet’s Strong 2025 Performance ...

Market Overview - U.S. equity markets ended the fourth quarter positively, with the S&P 500 and Nasdaq 100 rising 2.4% and 2.6% respectively, while the Dow Jones Industrial Average led with a 3.6% return [2] - The Russell 1000 Growth Index lagged, increasing only 1.1% as investors shifted from high-growth technology stocks to more defensive sectors [2] - The quarter was marked by significant volatility, influenced by a 43-day government shutdown that affected market transparency and risk appetite [2] Economic and Monetary Policy - Approximately 83% of S&P 500 companies reported positive earnings surprises, indicating a broadening economic recovery beyond the "Magnificent Seven" [4] - The Federal Reserve implemented two 25-basis point cuts, bringing the federal funds rate to a range of 3.50% to 3.75% by year-end, and concluded its quantitative tightening program [4] - The Fed's balance sheet expanded by approximately $100 billion to $6.6 trillion, reflecting a shift from "abundant" to "ample" bank reserves [4] Sector Performance - Ithaka's portfolio underperformed the Russell 1000 Growth Index by 700 basis points, with stock selection detracting 740 basis points from relative performance [6] - Positive relative returns were generated in the Materials and Processing sector, while Technology and Consumer Discretionary sectors were significant sources of underperformance [7] - Weakness in Technology was attributed to fears of AI disintermediating software stocks, while Consumer Discretionary faced pressures from consumer spending concerns [7] Top Contributors and Detractors - Top contributors included Intuitive Surgical (26.6% return), Advanced Micro Devices (32.4%), and Alphabet (28.9%), driven by strong earnings and positive investor sentiment [9][10][12] - Major detractors were ServiceNow (-16.8%), Netflix (-21.8%), and Veeva Systems (-25.1%), with concerns over AI impacts and unexpected financial disclosures affecting stock performance [9][15][16] Investment Strategy and Outlook - Ithaka initiated three new positions and eliminated four during the quarter, with a trailing 12-month turnover of 22.1% [17] - The investment approach focuses on long-term wealth creation through concentrated positions in high-quality companies with strong management and favorable market conditions [4][19] - The narrative around AI is shifting towards tangible productivity gains, suggesting that the economic opportunities from AI will continue to expand [18]

Corporate News - Danish drugmaker Novo Nordisk surged nearly 5 percent after launching its once-daily Wegovy pill in the United States [3] - TomTom jumped 4.1 percent after renewing its partnership with Uber Technologies to integrate its maps, Maps APIs, and live services across Uber's global platform [4] - German wind turbine maker Nordex gained 1 percent after receiving new orders from wind and solar park developer UKA [4] - Prudential rose about 2 percent after launching a $1.2 billion share buyback program [4] - Next Plc shares were up almost 3 percent after lifting its annual profit forecast, reporting a significant 10.6 percent increase in full-price sales for the nine weeks ending December 27, 2025 [5] - InPost shares soared 15 percent after announcing it received an indicative buyout offer, with a special committee set to assess the potential transaction [5] Market Overview - European stocks were mixed, with the pan-European Stoxx 600 up 0.2 percent at 602.81 after climbing 0.9 percent on Monday amid easing U.S.-Venezuela tensions [2] - The German DAX was marginally lower, France's CAC 40 slipped 0.3 percent, while the U.K.'s FTSE 100 was up 0.6 percent [2] - The shop price index in the U.K. posted an annual growth of 0.7 percent in December, following an increase of 0.6 percent in November, aligning with the three-month average of 0.7 percent [2]

Core Viewpoint - Google stock has gained significant attention due to new AI product launches and ongoing antitrust developments, raising questions about its future valuation and potential for further appreciation [2][3]. Financial Performance - Alphabet has achieved an average annual growth rate of 11.0% in its top line over the last three years, with revenues increasing by 13% from $340 billion to $385 billion in the past 12 months [7]. - Quarterly revenues rose by 15.9% to $102 billion in the latest quarter, up from $88 billion a year prior [7]. - GOOGL's operating income for the last 12 months was $124 billion, reflecting an operating margin of 32.2% [8]. - The company produced nearly $151 billion in operating cash flow during the same period, with a cash flow margin of 39.3% [8]. - GOOGL reported a net income of approximately $124 billion, indicating a net margin of around 32.2% [8]. Valuation and Market Position - GOOGL is currently viewed as fairly priced, with a high valuation reflecting its strong operational performance and financial health [3]. - The company's market capitalization stands at $3.9 trillion, with a debt of $34 billion, resulting in a debt-to-equity ratio of 1.1% [10]. - GOOGL's cash and cash equivalents amount to $98 billion, producing a cash-to-assets ratio of 18.4% [10]. Resilience and Recovery - GOOGL has shown moderate resilience during economic downturns, performing slightly better than the S&P 500 index during various recessions [9]. - The stock experienced a peak-to-trough decline of 44.3% from November 2021 to November 2022 but fully recovered to its pre-crisis high by January 2024 [11]. - GOOGL stock has demonstrated a strong recovery pattern, rebounding from significant declines during past crises, including the 2008 financial crisis and the COVID-19 pandemic [11].

Investment in AST SpaceMobile - AST SpaceMobile received a $155 million investment in early 2024, followed by an additional $203 million in shares during Q1 2023, indicating strong confidence in its partnerships with carriers like AT&T and Vodafone, which collectively serve over 2.5 billion subscribers [1] - AST plans to offer nationwide intermittent service in the U.S. by late 2025, with expansions to Canada, Japan, and the U.K. in early 2026, suggesting explosive growth prospects [1] - Analysts predict significant revenue growth driven by these partnerships, supported by a $1.2 billion cash buffer and a recent $420 million loan for satellite launches [1] Alphabet's Investment Strategy - Alphabet's investment in AST SpaceMobile is valued at approximately $459 million, representing 18% of its equity holdings, as it aims to build a satellite-based cellular network to connect unmodified smartphones directly from space [3] - Through GV and CapitalG, Alphabet manages a portfolio of about 37 public stocks valued between $2.5 billion and $3 billion, with AST SpaceMobile, Planet Labs, and Arm Holdings as its largest positions, reflecting a strategy focused on high-growth sectors [4] - Alphabet's venture arm targets innovations that enhance connectivity for Android devices and improve geospatial data capabilities, aligning with its broader ecosystem [5] Performance and Market Outlook - AST SpaceMobile's stock has increased by 143% year-to-date, despite a recent decline after missing Q3 estimates, trading around $52 per share [7] - The company has potential for a 50% upside by 2026 if it captures a portion of the $100 billion satellite broadband market, indicating significant market disruption potential [7] Planet Labs Overview - Planet Labs holds a $356 million stake in Alphabet's portfolio, representing about 17% of its holdings, and operates over 200 satellites for daily global imagery [8] - The company’s data supports environmental analytics and integrates with Google’s Earth AI models, enhancing Alphabet's cloud services for enterprise clients [9] Arm Holdings Overview - Arm Holdings, valued at around $258 million in Alphabet's portfolio, designs energy-efficient CPU architectures used in 99% of smartphones, with a focus on supporting Google Cloud [13] - Fiscal Q2 2026 revenue for Arm topped $1 billion, reflecting a 34% year-over-year increase, with analysts forecasting 21% long-term earnings growth [14]

Google is now baking Gemini into Maps to let users ask it questions while driving, improve navigation, and do more with the app. https://t.co/ynKwvviL1L ...

Core Insights - Google stock (NASDAQ: GOOG) has shown significant growth, increasing by 57% from approximately $160 in late April to over $250 as of now, supported by strong fundamentals [2][3]. Valuation - The current valuation of GOOG stock is considered Very High, leading to a rating of Relatively Expensive, suggesting a potential pullback to around $230 is possible [3][5]. Financial Performance - Alphabet Inc. has a market capitalization of $3.1 trillion and has experienced an average growth rate of 10.2% over the last three years [4][9]. - Revenues increased by 13% from $328 billion to $371 billion in the past 12 months, with quarterly revenues rising by 13.8% to $96 billion [9]. - Operating income for the last 12 months was $121 billion, reflecting an operating margin of 32.7% [9]. - The company generated nearly $134 billion in operating cash flow, with a cash flow margin of 36.0% [9]. - Net income for the same period was approximately $116 billion, indicating a net margin of about 31.1% [9]. Debt and Assets - At the end of the latest quarter, GOOGL's debt stood at $36 billion, resulting in a debt-to-equity ratio of 1.1% [9]. - The cash (including cash equivalents) amounts to $95 billion out of total assets of $502 billion, leading to a cash-to-assets ratio of 19.0% [9]. Market Resilience - GOOGL has shown moderate resilience during economic downturns, performing slightly better than the S&P 500 index in terms of stock decline magnitude and recovery speed [7].

Core Insights - Google has returned $343 billion to shareholders over the last decade through dividends and buybacks, driven by its dominance in the digital advertising market, which generated $264.6 billion in advertising revenue in 2024, accounting for 75.6% of its total revenue of $350 billion [2][3] - The company's business model is highly cash-generative due to minimal marginal costs associated with digital advertising, resulting in a net income of $100.1 billion for 2024 [3] - Google Cloud has become a significant cash contributor, generating $43.2 billion in 2024, benefiting from the shift of enterprises to AI-powered cloud services [4] Financial Performance - Google's search advertising revenue reached $198.1 billion in 2024, while YouTube contributed $36.1 billion, showcasing the strength of its advertising platforms [2] - The company maintains a free cash flow margin of nearly 18.0% and an operating margin of 32.7% in the last twelve months [11] - Revenue growth for Google was 13.1% in the last twelve months, with a three-year average growth rate of 10.2% [11] Market Position - Google stock has returned the third highest amount to shareholders in history, indicating strong management confidence in the company's financial health [6] - The total capital returned to shareholders as a percentage of market cap appears inversely proportional to growth prospects for reinvestments, with companies like Meta and Microsoft showing faster growth but lower capital returns [8] - Alphabet stock trades at a P/E multiple of 26.6, offering higher valuation, revenue growth, and better margins compared to the S&P [11]

Core Insights - The UK Competition and Markets Authority (CMA) has designated Google with strategic market status (SMS) in general search and search advertising services due to its significant market power [1][5] - The SMS designation allows the CMA to consider regulatory interventions to promote competition and fair treatment in digital markets, although it does not imply any immediate requirements for Google [2][4] Regulatory Context - The CMA's digital markets competition regime has been active since January 1, 2025, granting it new authority to implement targeted measures [2] - The designation follows an investigation initiated on January 14, 2025, involving consultations with over 80 stakeholders [1][2] Scope of SMS Designation - The SMS designation covers general search and search advertising services, while Google's Gemini AI assistant is currently excluded, though this may be reviewed in the future [3] - Other AI-driven search features, such as AI Overviews and AI Mode, are included in the SMS designation [3] Future Plans - The CMA plans to consult on potential regulatory interventions later in the year as part of its oversight of digital platforms [4] - The CMA aims to promote competition in digital markets to foster innovation and growth across the UK economy [4] Market Position - Google holds over 90% of the search market share in the UK, reinforcing its strategic position in the sector [5] - Google has announced a €5 billion ($5.8 billion) investment in Belgium for 2026 and 2027 to enhance its AI infrastructure and core services [5][6]