Alphabet Earnings Surge Past $400B as Google AI Drives Growth Amid Capacity Constraints

Alphabet to report earnings: AI, ad momentum key to the fourth quarter

Sundar Pichai, CEO of Google and Alphabet, attends the inauguration of a new hub in France dedicated to the artificial intelligence sector, at the Google France headquarters in Paris, France, on Feb. 15, 2024. Alphabet is set to report its fourth-quarter earnings Wednesday after the bell. Here's what analysts polled by LSEG are expecting: Wall Street is also watching several other numbers in the report. Here is what analysts polled by StreetAccount are expecting: Alphabet's latest earnings results will test how far the company can rally Wall Street's favor. As one of the Street's top performers of 2025, Alphabet's stock has risen more than 70% in the past six months. Last month, Google became the fourth member of the $4 trillion club, joining Nvidia, Microsoft and Apple as the other companies that have achieved that milestone. Wall Street will be looking for more details on the recently announced deal for Google to revamp Apple's AI features, including the Siri virtual assistant, with the search company's Gemini artificial intelligence models. The deal is one of the most prominent yet for Gemini as the scale of Apple's user base boasts 2.5 billion active devices. During the fourth quarter, Google made a number of notable announcements. In November, the company launched its Gemini 3 models to strong reviews. Google also rolled out the seventh generation of its tensor processing units, called Ironwood. And Alphabet's driverless car unit Waymo also began opening its robotaxi routes to freeways in three major U.S. cities, marking a major milestone for the ride-hailing company. Amin Vahdat, Google's AI infrastructure boss, told employees that the company has to double its serving capacity every six months in order to meet demand for AI services, CNBC reported in November. "The competition in AI infrastructure is the most critical and also the most expensive part of the AI race," Vahdat said. In December, Alphabet agreed to acquire data center company Intersect for $4.75 billion in cash and the assumption of debt. Since the start of the year, Alphabet has made more AI announcements, besides the deal with Apple. The earnings Wednesday will be Alphabet's first opportunity to touch on the announcements with investors. In January, the company launched an AI feature called "Personal Intelligence," which connects information from apps like Gmail and Google Photos to provide users personalized answers in the Gemini chatbot. Google also announced a protocol for AI shopping agents called Universal Commerce Protocol as the company tries to secure its position in AI-powered commerce, which has emerged as one of the major battlegrounds within consumer and business-facing AI. As part of a licensing agreement, Google DeepMind brought on the CEO and several of the top engineers at AI voice startup Hume AI, which it reportedly plans to use to improve Gemini's voice features. Earlier this week, Waymo said it raised a $16 billion funding round that values the company at $126 billion. The company ended 2025 having served 15 million trips in five major U.S. markets, including Austin, Atlanta, Los Angeles, Phoenix and the San Francisco Bay Area.

Google's quarterly results paint a picture of an internet powerhouse getting stronger in AI age

SAN FRANCISCO (AP) -- Google's latest quarterly report provided further evidence that its internet empire is withstanding an artificial intelligence shakeup that's turning into another potential boon for the company. The numbers released Wednesday marked Google's third consecutive quarter of digital ad growth of more than 10% from the previous year, while also posting more than 30% sales growth in its division that powers data centers for AI services. Those increases during the October-December period propelled Google's corporate parent Alphabet Inc. well past the earnings forecasts of stock market analysts. Alphabet's fourth-quarter profit rose 30% from the prior year to $34.5 billion, or $2.82 per share, while revenue climbed 18% to $113.8 billion. The collective momentum of Google's main business in search and advertising and the still-nascent AI field indicates a company born during the late 1990s internet boom is becoming even stronger during another technology phenomenon nearly 30 years later. "Search saw more usage than ever before, with AI continuing to drive an expansionary moment," Alphabet CEO Sundar Pichai said. Google's successful evolution has helped drive up Alphabet's stock price nearly 60% in the past five months, giving it a $4 trillion market value. That may have raised the bar for Alphabet to impress investors as the company's shares dipped 1% in extended trading following the report. Apple, also currently worth $4 trillion, thinks so highly of Google's AI that the iPhone maker recently struck a deal to use Google's Gemini technology in a long-delayed upgrade to its virtual assistant, Siri. Google is also embedding more of its Gemini AI into its long-dominant search engine, Gmail and Chrome browser as it tries to avoid complacency and being outmaneuvered by up-and-coming companies such as OpenAI, Anthropic and Perplexity. To meet the challenge, Alphabet has been on a spending spree to expand its AI capacity. After pouring $91 billion into capital expenditures devoted mostly to AI last year, the Mountain View, California company is expected to spend even more this year. Its capital expenditure budget has ballooned from about $30 billion annually since 2022 when OpenAI released its ChatGPT chatbot to much acclaim, prompting Google to pull out all the stops to catch up. Google's thriving digital ad business is helping finance the spree. Its digital ad sales totaled $82.3 billion in the fourth quarter, up 14% from the previous year. Google Cloud, which oversees the data centers behind many AI services, posted revenue of $17.7 billion, a 48% increase. Search saw more usage than ever before, with AI continuing to drive an expansionary moment

Google Hits Historic $400B Revenue as AI Bet Pays Off: 5 Things to Know

Gemini 3 Pro is said to be witnessing 3X daily usage as its predecessor Google, on Wednesday, announced the quarterly financial results for Q4 2025. During the earnings call with investors and analysts, company CEO Sundar Pichai revealed that Google's parent Alphabet crossed $400 billion (roughly Rs. 36.07 lakh crore) in annual revenue for the first time. The massive revenue milestone comes on the back of the company's massive push into artificial intelligence (AI) technology, and increased demand from consumers and enterprises. For the specific quarter, Pichai said the release of the Gemini 3 AI model was a major milestone. Here are the top five takeaways from the earnings call. Google Q4 2025 By Numbers In the fourth quarter of 2025, Google's overall revenue was recorded at $113.8 billion (roughly Rs. 10.26 lakh crore), with a growth of 18 percent year-on-year (YoY), the company said in a blog post. Breaking it down, the Google CEO said that revenue from Search grew by 17 percent YoY, whereas YouTube's annual revenue crossed $60 billion (roughly Rs. 5.41 lakh crore) across ads and subscriptions. The company also stated that it has amassed 325 million paid subscriptions across consumer services and has seen strong adoption for Google and YouTube Premium. Pichai also revealed that Google sold more than eight million paid seats of Gemini Enterprise in this quarter. Notably, the offering was launched four months ago, highlighting its strong adoption. The company expected its 2026 capital expenditure (CapEx) to be between $175 billion (roughly Rs. 15.78 lakh crore) and $185 billion (roughly Rs. 16.68 lakh crore). Gemini Continues to Be a Major Revenue Driver During the earnings call, Pichai revealed that the launch of the Gemini 3 AI model was a major milestone for the company in the fourth quarter of the previous year. Additionally, the CEO said that the Gemini app now has more than 750 million monthly active users (MAUs). "We are also seeing significantly higher engagement per user, especially since the launch of Gemini 3 in December," he added. Notably, Pichai said that Gemini 3 Pro has processed an average of three times as many daily tokens as Gemini 2.5 Pro, its predecessor. Gemini-powered development platform Google Antigravity, which was also launched in Q4 2025, now has more than 1.5 million weekly active users, the CEO said. Google's Full-Stack AI Infrastructure Enables Cost Optimisation Ever since the start of the AI race, Google has leveraged its full-stack infrastructure. The company has its own data centres powered by in-house tensor chipsets, builds its own models, and distributes the AI features via its enterprise offerings, Android ecosystem, and Pixel devices. During the earnings call, Pichai said that the tech giant has expanded its compute options by securing Nvidia's Vera Rubin GPUs alongside its own TPUs. "In December, we announced our intent to acquire Intersect, which provides data centre and energy infrastructure solutions," he added. Google said that it was able to lower Gemini serving unit costs by 78 percent in 2025 via model optimisations, efficiency, and utilisation improvements. YouTube Remains Major Revenue Contributor With more than $60 billion (roughly Rs. 5.41 lakh crore) in annual revenue, YouTube is consolidating its position in the video streaming market. While the CEO did not share subscription numbers, he said, "We continue to see strong subscription revenue growth across YouTube, particularly YouTube Music Premium." The company also confirmed that it will soon launch new YouTube TV plans, with options for 10 genre-specific packages. Highlighting the popularity of the platform when it comes to podcast consumption, Pichai mentioned that in October 2025, viewers watched more than 700 million hours of podcasts on living room devices, marking a growth of 75 percent YoY. AI features on the platform are also witnessing a strong adoption. The CEO mentioned that more than 20 million viewers used the new Gemini-powered Ask tool in October to learn more about the content they watched. Focus on Google Cloud The Google CEO revealed that its cloud services witnessed growth in revenue, operating margin, and backlog in Q4 2025. Google Cloud is said to have forged deals worth more than $1 billion (roughly Rs. 9,018 crore) in 2025, which is more than the combined deals forged in the previous three years. "Nearly 75 percent of Google Cloud customers have used our vertically optimised AI[..]These AI customers use 1.8 times as many products as those who do not, enabling us to diversify our product portfolio, deepen customer relationships and accelerate revenue growth," Pichai said. Additionally, Pichai revealed that Gemini Enterprise managed more than five billion customer interactions in Q4, growing 65 percent YoY. During the same period, revenue from AI solutions built by the company's partners also increased nearly 300 percent YoY, resulting in commitments from the top 15 software partners growing 16X YoY.

Alphabet CEO Sundar Pichai Says AI Capacity Is What 'Keeps Us Up At Night' As Power, Land And Supply Chain Limits Test Growth - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

On Wednesday, during Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) fourth-quarter earnings call, CEO Sundar Pichai said meeting surging AI demand has become the company's biggest near-term challenge. AI Demand Is Rising Faster Than Capacity Responding to an analyst question about what concerns leadership most at this stage of Google's evolution, Pichai said the company's long-standing "AI-first" strategy is now colliding with real-world constraints. "What keeps us up at night... We've been on this AI-first trajectory for over a decade," Pichai said, pointing to years of investments in custom chips like tensor processing units, or TPUs. However, he added that the current moment presents a unique challenge. "The top question is definitely around capacity," Pichai said. "All constraints -- bet it power, land, supply chain constraints -- how do you ramp up to meet this extraordinary demand for this moment?" Power, Land And Supply Chains Emerge As Key Bottlenecks Pichai said Google is spending significant time ensuring it can scale infrastructure responsibly while maintaining efficiency, a balancing act as data center expansion becomes more complex and expensive. The comments reflect a broader industry struggle as tech giants race to deploy AI models that require massive computing resources. Power availability, data center locations and equipment sourcing have increasingly become limiting factors for growth across the sector. Pichai said the company is focused on making the right long-term investments without sacrificing operational discipline. "Get our investments right for the long term, and do it all in a way that we are driving efficiencies and doing it in a world-class way," he said, noting that this is where much of his attention is currently focused. Alphabet Beats Q4 Revenue Estimates Alphabet posted fourth-quarter revenue of $113.83 billion, topping the Street's consensus estimate of $111.31 billion, according to Benzinga Pro data. Revenue rose 18% from a year earlier, supported by double-digit growth across all business segments. Looking ahead, the company said 2026 capital expenditures are expected to range between $175 billion and $185 billion, with the bulk of spending aimed at expanding AI computing capacity, strengthening technical infrastructure and supporting cloud growth. Price Action: Alphabet shares closed lower Tuesday, with Class A stock falling 1.96% to $333.04 and Class C shares dropping 2.16% to $333.34, while both ticked down about 0.4% in after-hours trading, according to Benzinga Pro. GOOG shows a stronger price trend across the short, medium and long term, though the stock carries a weak value ranking, according to Benzinga's Edge Stock Rankings. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo Courtesy: MNAphotography on Shutterstock.com Market News and Data brought to you by Benzinga APIs

Alphabet (GOOGL) Q4 2025 Earnings Call Transcript | The Motley Fool

AI Compute Capacity Constraints -- CEO Pichai said, "I do to go through the year in a supply constrained way," indicating persistent compute and infrastructure limitations may impact ability to fully capitalize on demand. Alphabet (GOOGL 1.89%) delivered record revenues, accelerated margin expansion in cloud, and materially increased operating and free cash flow. Management asserted AI-driven efficiency and adoption are driving unit economics improvement, with Gemini model usage and customer commitments reaching new highs. Newly announced Apple and Reliance Jio partnerships further extend Gemini's technological and commercial reach, and CapEx guidance signals a continued scaling of technical infrastructure. Product launches, including Gemini 3 and Universal Commerce Protocol, are designed to monetize emerging behaviors in search and agentic commerce across global platforms. Sundar Pichai: Thanks, Jim. Hi, everyone. Thanks for joining us. It was a tremendous quarter for Alphabet. The launch of Gemini 3 was a major milestone, and we have great momentum. Alphabet annual revenues exceeded $400 billion for the first time. This quarter, Search continued to accelerate with revenues growing 17%, YouTube's annual revenues surpassed $60 billion across ads and subscriptions. Cloud significantly accelerated with revenues growing 48% now on an annual run rate of over $70 billion. Backlog grew by 55% quarter over quarter to $240 billion representing a wide breadth of customers driven by demand for AI products. We have over 325 million paid subscriptions across consumer services, strong adoption for Google One and YouTube Premium. In addition, we have sold more than 8 million paid seats of Gemini Enterprise, we launched just four months ago. And our Gemini app now has over 750 million monthly active users. We are also seeing significantly higher engagement per user especially since the launch of Gemini 3 in December. Overall, we are seeing our AI investments and infrastructure drive revenue and growth across the board to meet customer demand and cap on the growing opportunities ahead of us, our 2026 CapEx investments are anticipated to be in the range of $175 to $185 billion. Today, I'll provide an update on our AI progress and then share highlights from Search, Cloud, YouTube, and Waymo. First, AI progress across the full stack. Our unrivaled infrastructure serves as the bedrock of our AI stack. We have the industry's widest variety of compute options. That includes GPUs from our partner NVIDIA, who announced at CES that we'll be among the first to offer their latest Vera Rubin GPU platform. Plus our own TPUs that we have been developing for a decade. In December, we announced our intent to acquire Intersect which provides data center and energy infrastructure solutions. As we scale, we are getting dramatically more efficient. We were able to lower Gemini serving unit costs by 78% over 2025 through model optimizations, efficiency, and utilization improvements. Next, world-class AI research including models and tooling. We offer the most extensive model portfolio in the world, and lead across text, vision, and image to video LM Arena leaderboards. Gemini 3 Pro drives the state of the art in reasoning and multimodal understanding. It has seen the fastest adoption of any model in our history. Since launch, Gemini 3 Pro has consistently processed three times as many daily tokens on average as 2.5 Pro. Our latest model powers Google Anti Gravity, our new development platform where agents can autonomously plan and execute complex software tasks. It already has more than 1.5 million weekly users after launching just over two months ago. Our first-party models like Gemini now process over 10 billion tokens per minute via direct API used by our customers, up from 7 billion last quarter. Third, bringing AI to our products and platforms. We are shipping innovation at scale to bring helpful AI features to people everywhere. In January alone, we have launched personal intelligence in AI mode in search and the Gemini app. Introduced new features to Gmail and updated Vio. Reimagine Chrome as an AI-first agentic browser through features like Chrome Autobrowse. Announced Project Genie, which lets users create and explore interact worlds generated in real-time using Genie 3, our general-purpose world model. And we laid the groundwork for shopping in the AI era by introducing a new open standard for agentic commerce. The Universal Commerce Protocol built alongside many retail industry leaders. Finally, from Android to Pixel, we are getting our best AI capabilities into People's hands. At CES, a range of partners, including Samsung, showcased how they are bringing Gemini to more devices from XR to the living room and beyond. And to confirm the rumors, we'll be introducing our Pixel 10a to our best-ever rated Pixel 10 series very soon. Turning now key highlights from the quarter, starting with Search. Search saw more usage in Q4 than ever before, as AI continues to drive an expansionary moment. We have executed with incredible speed, We shipped over 250 product launches, within AI mode and AI overviews just last quarter. We have integrated Gemini 3 directly into AI mode and search. Now Search can better understand your query, dive deeper on the web, and generate interactive UI experiences. And last week, we upgraded AI overviews to Gemini 3 giving users a best-in-class AI response at the top of the search results page. We have also made the search experience more cohesive ensuring the transition from an AI overview to a conversation in AI mode is completely seamless. These new experiences are proving to be more helpful and are driving greater usage. A few highlights. First, once people start using these new experiences, they use them more. In The US, we saw daily AI mode queries per user double since launch and AI overviews continue to perform very well. Second, people are engaging in longer, more complex sessions. Queries in AI mode are three times longer than traditional searches. We are also seeing sessions become more conversational, with a significant portion of queries in AI mode, now leading to a follow-up question. Third, people are searching in new ways beyond text. Nearly one in six AI mode queries are now non-text using voice or images. And Circle to Search is now available on over 580 million Android devices. Next, Google Cloud. Our growth in revenue, operating margin, and backlog highlights the strength of our entire portfolio. One, we are winning more new customers faster. We exited the year with double the new customer velocity compared to Q1. Two, we are also signing larger customer commitments. The number of deals in 2025 over $1 billion surpassed the previous three years combined. And three, we continue to deepen our relationships with existing customers who are outpacing their initial commitments by over 30%. Nearly 75% of Google Cloud customers have used our vertically optimized AI, from chips to models to AI platforms and enterprise AI agents, offer superior performance quality, security, and cost efficiency. These AI customers use 1.8 times as many products as those who do not enabling us to diversify our product portfolio. Deepen customer relationships and accelerate revenue growth. Our product line has multiple monetization levers spanning infrastructure, platform, and high-margin AI-powered products and services with 14 product lines each exceeding $1 billion in annual revenue. We offer leading infrastructure for AI training, and inference to our cloud customers. With the industry's widest variety of compute options, from our own seventh-generation Ironwood TPU to the latest NVIDIA GPUs. Our ten-year track record in building our own accelerators with expertise in chips, systems, networking, and software translates to leading power and performance efficiency for large-scale inference and training. Our Cloud AI accelerators serve the leading frontier AI labs. Capital markets firms like Citadel Securities, enterprises like Mercedes Benz, and governments for high-performance computing applications. We also offer our leading generative AI models including Gemini, Imagine, Vio, Chirp, and Liria to cloud customers. December alone, nearly 350 customers each process more than 100 billion tokens. In Q4, revenue from products built on our generative AI models grew nearly 400% year over year. Significantly accelerating from the prior quarter. Today, more than 120,000 enterprises use Gemini, including AI unicorns like Lovable and Open Evidence. And global enterprises like Airbus and Honeywell. 95% of the top 20 and over 80% of the top 100 SaaS companies use Gemini, including sales and Shopify. Gemini is becoming the AI engine for the world's most successful software companies. Leading enterprises are also driving strong demand for our enterprise AI agents. We have sold more than 8 million paid seats of Gemini Enterprise our enterprise AI platform, to more than 2,800 companies including BNY and Virgin Voyages. To streamline knowledge management and automate processes. Gemini Enterprise managed over 5 billion customer interactions in Q4, growing 65% year over year. For customers, including Wendy's, Kroger, and Woolworths Group. Our integration of Gemini and Google Works is driving wins with global brands like Schwartz Group and public sector organizations like the U. S. Department of Transportation. We are also seeing momentum with independent software vendors. Revenue from AI solutions built by our partners increased nearly 300% year over year, and commitments from our top 15 software partners grew more than 16x year over year. Before moving on, I'm pleased that we are collaborating with Apple as their preferred cloud provider and to develop the next generation of Apple Foundation models based on Gemini technology. Up next, YouTube. I want to highlight four points. First, streaming. In the living room, YouTube continues to be the number one streamer in The US. For nearly three years, according to Nielsen. From the NFL to Coachella, YouTube is where people watch today's biggest popular culture moments unfold. Second, subscriptions. We continue to see strong subscription revenue growth across YouTube. Particularly YouTube Music Premium. We'll soon launch new YouTube TV plans bringing more choice and flexibility to subscribers. With over 10 genre-specific packages. The NFL has seen strong NFL Sunday Ticket subscriber growth with YouTube. With the highest paid subscriber number ever in the history of the product. Third, podcast. To illustrate YouTube's popularity, in October 2025, viewers watched over 700 million hours of podcasts on living room devices, up 75% from just a year prior. And fourth, AI is transforming the YouTube experience for both creators and viewers. On average, every day in December, over 1 million channels used our new AI creation tools to supercharge their creativity. During that same month, more than 20 million viewers used our new tool powered by Gemini to learn more about the content they watched. And finally, Waymo, This week, Waymo raised its largest investment round to date and is well positioned to continue its momentum with safety at the core. In December, we surpassed 20 million fully autonomous trips and are now providing more than 400,000 rides every week. Waymo continues to expand its service territory. Its sixth market, Miami, launched two weeks ago and Waymo will soon expand its service to multiple cities across The U. S. And in The UK and Japan. The team has made incredible progress on important capabilities, including opening up public service to airports and freeways. In closing, 2025 was a fantastic year for the company a big thanks to our employees and partners worldwide. We are really well positioned going into 2026. Now, over to Philip. Thanks, Sundar, and hello, everyone. I'll cover performance for Google services for the quarter, then structure the rest of my remarks around the great progress we're delivering across search, YouTube, and partnerships. Google services revenues were $96 billion for the quarter, up 14% year on year, primarily driven by accelerated growth in search. Adding some further color to our results. The 17% increase in search and other was led by broad strength across all major verticals. With retail particularly strong. On YouTube, the 9% growth in advertising revenues was driven by direct response. Network advertising revenues were down 2% year on year this quarter. Starting with Search and Other revenues, which delivered over $63 billion in revenue for the quarter. Sundar mentioned the expansionary moment for Search. The same is true for ads. We're investing in AI to drive significant improvements across all areas of marketing. We're expanding the entire playing field that advertisers can compete on. AI gives businesses the ability to reach more customers in more places than ever before. Gemini uniquely positions us to bring the transformational benefits of AI to ads in three critical areas for our customers. Ads quality, advertiser tools, and new AI user experiences. First, ads quality. We've been deploying Gemini models to improve query understanding at a rate of almost a launch per month for the last two years. These improvements drive better query matching, ranking, and quality making search ads even more effective. With Gemini across our ads quality stack, we evaluate relevance with greater accuracy than with previous generations of models. This has significantly improved our ability to systematically deliver more helpful high-quality ads contributing to a meaningful reduction in irrelevant ads served. Gemini's understanding of intent has increased our ability to deliver ads on longer, more complex searches that were previously challenging to monetize. Gemini models also have a significant impact on query understanding in non-English languages, expanding opportunities for businesses to scale globally. Second, we're building more agentic actions into our advertiser tools. Business can now leverage Gemini in conversational experiences within ads and analytics Advisor to identify and run recommended such as generating new campaigns. Advertisers use Gemini as a real-time partner to assemble creatives. In Q4 alone, they use Gemini to create nearly 70 million creative assets via text customization in AI Max and PMax. For instance, Aritzia, Canada's premier fashion house, used AI Max to find new high-value customers that traditional strategies miss, delivering an 80% incremental uplift in conversion value for Q4. L'Oreal, one of the first alpha testers, used AI Max 2025 across 800 unique campaigns in 23 countries and 30 brands. AI Max enabled the L'Oreal Group to maximize its presence across the full consumer journey, fuel its consumer growth, and increase revenue for DTC brands like Nick's by 23%. Third area is how we monetize new AI user experiences in search. We have significantly increased our focus on AI mode and are in the early stages experimenting with AI mode monetization, like testing ads below the AI response, with more underway. For example, we announced direct offers in new Google Ads pilot which will allow advertisers to show exclusive offers for shoppers who are ready to buy directly in AI mode. This new type sponsored content uses AI to match the right offer provided by the retailer to the right user. As Sundar mentioned, we are building the era of agenda commerce and working with partners to introduce the universal commerce protocol in our consumer products and across the web. We've received tremendous feedback from the industry. Soon, people can use a new checkout experience to buy directly in AI mode in Gemini from select merchants. Turning now to YouTube, which remains the number one streamer in The US for nearly three years according to Nielsen. YouTube creators are providing an unmatched breadth of content. Our investment in AI innovation across creativity, viewing experience, and monetization continues to pay off. We're seeing strong traction in our subscription business, our innovating to meet consumers where they are. We added a new sports tier for YouTube TV at a lower price point. YouTube Premium Lite is proving to be a popular choice. And we continue to deliver strong year on year growth across YouTube subscriptions particularly YouTube Music and Premium. Looking at monetization across YouTube, momentum continues in Shorts and the living room. Shorts now averages over 200 billion daily views. And as we've shared before, in a number of countries, Shorts earns more revenue per watch hour than traditional in-stream on YouTube, including The US. The retail vertical continues to grow fueled by smaller advertisers increasingly adopting demand gen. Likewise, direct response continues to benefit from the momentum we're seeing with small and medium-sized advertisers. Viewers trust product and brand recommendations from YouTube creators, and we're focused on making YouTube a premier shopping destination. Innovations like shoppable ad formats are improving advertiser return on investment. During Cyber five, advertisers piloted shoppable mass eads, a new interactive ad format where viewers browse products and send links to their phones for an easy shopping experience. On brands, our creator partnership hub makes it easier for brands to find creators and develop campaigns. This holiday season, brands like JCPenney, Old Navy, and Target work with creators for their holiday campaigns. Mattel partnered with eight top YouTube creators to reach families during the peak holiday shopping season in a campaign that helped drive a 25% increase in search volume for UNO. As always, I wrap with the progress we're seeing across partnerships. Where customers tap into the strength and breadth of Google's products to accelerate their transformation. I would start by joining Sundar and saying hope pleased I am that we are collaborating with Apple as their preferred cloud provider and to develop the next generation of Apple foundation models based on Gemini technology. We partnered with Reliance Jio to provide over 500 million consumers with an eighteen-month free trial of our Gemini suite of products and two terabyte of cloud storage. Reliance Enterprise customers will also get access to Google Cloud Gemini Enterprise and TPUs, bringing the best of Google AI to every employee and workflow. The Home Depot is applying Google AI across the board from cloud tools to AI-powered ads and YouTube creator partnerships that connect with the next generation of Duos. Their investments in PMax and YouTube creator partnerships have resulted in double-digit increase in ad clicks and visits. In closing, I'd like to thank Googlers everywhere for their contributions to our success and, as always, to our customers and partners for their continued trust. Anat, over to you. Anat Ashkenazi: Thank you, Philip. My comments will focus on year-over-year comparisons for the fourth quarter unless they state otherwise. I will start with results at the Alphabet level and will then cover segment results. I'll end with some commentary on our outlook for the first quarter and full year 2026. 2025 was a strong year of innovation and execution for Alphabet. These efforts, combined with our investments in AI, drove meaningful results across the business. For the full year 2025, Alphabet consolidated revenues were $403 billion up 15% on a reported and constant currency basis. Moving to Q4 performance, we delivered strong growth in the fourth quarter. Consolidated revenues reached $113.8 billion up 818%, or 17% in constant currency and was driven by an acceleration in Search and Cloud revenues. Turning to costs and expenses. We reported $2.1 billion stock-based compensation charge due to increase in Waymo's valuation related to the investment round that was announced on Monday. The vast majority of the charge was reflected in R and D expenses. Total cost of revenue was $45.8 billion up 13%. Tech was $16.6 billion up 12%. Other cost of revenues was $29.2 billion up 13% with the increase primarily driven by depreciation associated with the deployment of our technical infrastructure content acquisition costs largely for YouTube and other technical infrastructure operations costs. Total operating expenses were up 29% to $32.1 billion R and D expense increased by 42% driven by compensation and depreciation. The increase in compensation was due to the Waymo charge and investment in AI talent. Sales and marketing expenses were up 12% primarily driven by marketing investments to support the Gemini app and search. And G and A expenses increased 21% primarily due to a shift in timing of our charitable contributions. Operating income increased 16% to $35.9 billion and operating margin was 31.6%. Both operating income and operating margin were negatively by the $2.1 billion Waymo charge in the quarter. Other income and expenses was $3.2 billion primarily due to unrealized gains in our non-marketable equity securities portfolio. Net income increased 30% to $34.5 billion and earnings per share increased 31% to $2.82. We generated record operating cash flow of $52.4 billion in the fourth quarter and $160.5 billion for the full year. This translated into $24.6 billion of free cash flow in the fourth quarter and $73.3 billion for the full year. We ended the quarter with $120.8 billion in cash and marketable securities and $46.5 billion in long-term debt. Turning to segment results. Google services revenues increased 14% to $95.9 billion reflecting strong growth in search and subscriptions. Google Search and other advertising revenues increased by 17% to $63.1 billion representing another strong quarter with continued growth across all major verticals with the largest contribution from retail. YouTube advertising revenues increased 9% to $11.4 billion driven by direct response advertising. Results were negatively affected from the lapping of the strong spend on U. S. Election in the 2024 that we've mentioned on previous earnings calls. Network advertising revenues of $7.8 billion were down 2%. Subscription, platforms, and devices revenues increased 17% this quarter to $13.6 billion due to strong growth in YouTube subscriptions, particularly YouTube Music and Premium and growth in Google One benefited from increased demand for AI plans. Google services operating income increased 22% to $40.1 billion and operating margin was 41.9%. The Google Cloud segment delivered outstanding results in the fourth quarter as the business continued to benefit from strong demand for enterprise AI products. Cloud revenue accelerated meaningfully and were up 48% to $17.7 billion. Revenues were driven by strong performance in GCP which continued to grow at a rate that was much higher than cloud's overall revenue growth rate. As Sundar noted, we're driving performance through strong growth in the win rate of new customers, signing larger customer commitments, and increasing spend with existing customers. GCP's performance was driven by accelerating growth in enterprise AI products which are generating billions in quarterly revenues. We had strong growth in both enterprise AI infrastructure driven by deployment of TPUs and GPUs and enterprise AI solutions which benefited from demand for industry-leading models. Including Gemini 3. Core GCP was also a meaningful contributor to growth due to strong demand for infrastructure and other services, such as cybersecurity and data analytics. We also had double-digit growth in Workspace, driven by an increase in average revenue per seats and the number of seats. Cloud operating income was $5.3 billion more than doubling year over year. And operating margin increased from 17.5% in the fourth quarter of last year to 30.1%. Google Cloud's backlog increased 55% sequentially and more than doubled year over year, reaching $240 billion at the end of the fourth quarter. The increase in backlog was driven by strong demand for our cloud products led by our enterprise AI offerings, from multiple customers. In Other Bets revenues were $370 million and operating loss was $3.6 billion reflecting the $2.1 billion Waymo charge I mentioned earlier. We allocate resources in Other Bets to businesses like Waymo where we see meaningful opportunities to create value. Alphabet funded a significant portion of the $16 billion investment round that Waymo announced on Monday, which will allow the business to accelerate its global expansion. CapEx was $27.9 billion for the fourth quarter, and $91.4 billion for the full year. In line with our expectation. The vast majority of our CapEx was invested in technical infrastructure approximately 60% of that investment in servers, and 40% in data centers and networking equipment. In Q4, we returned capital to shareholders through $5.5 billion share repurchase, and $2.5 billion of dividend payments. Turning to our outlook, I would like to provide some commentary on factors that will impact our business performance in the first quarter and full year 2026. First, in terms of revenues, we're pleased with the overall momentum of the business. At current spot rates, we would expect to see an FX tailwind to our consolidated revenues in Q1. However, the volatility in exchange rates could affect the impact of FX on Q1 revenues. In Google services, we expect growth to be driven by ongoing in the user experience as well as improved ROI for advertisers. Keeping in mind the normal seasonal pattern for advertising revenue. In Google Cloud, we're seeing significant demand for our products and services. Which we expect to continue to drive strong growth despite the tight supply environment we're operating in. Moving to investments. The investments we have been making in AI are already translating into strong performance across the business as you've seen in our financial results. Our successful execution coupled with strong performance reinforces our conviction to make the investments required to further capitalize on the AI opportunity. For the full year 2026, we expect CapEx to be in the range of $175 billion to $185 billion with investments ramping over the course of the year. We're investing in AI compute capacity to support frontier model development by Google DeepMind, ongoing efforts to improve the user experience and drive higher advertiser ROI in Google services significant cloud customer demand, as well as strategic investments in Other Bets. Keep in mind that the availability of supply, pricing of components, and timing of cash payments can cause some variability in the reported CapEx number. In terms of expenses, as we've discussed on previous calls, the significant increase in our investments in technical infrastructure will continue to put pressure on the P and L in the form of higher depreciation expense and related data centers operations costs such as energy. In 2025, depreciation increased by nearly billion dollars or 38% from $15.3 billion in 2024 to $21.1 billion in 2025. Given the increase in our CapEx investments in recent years, we expect the growth rate in 2026 depreciation to accelerate in Q1 and meaningfully increase for the full year. We're also planning to continue hiring in key investment areas such as AI and cloud. In 2025, our teams delivered amazing innovation, executing with a high level of discipline and velocity. These efforts provide great experiences for consumers and outstanding performance for creators, partners, and enterprise customers, driving strong revenue growth. I want to take this opportunity to thank our employees for their contribution to this impressive performance. Now Sundar, Philip and I will take your questions. Jim Friedland: Thank you. As a reminder, to ask a question, you will need to press And your first question comes from Brian Nowak with Morgan Stanley. Your line is now open. Brian Nowak: Thanks for taking my questions. I have two, one on AgenTeq. One on YouTube. The first one on AgenTek, Sundar, I'd be curious to hear about you look back at 2025, do you think you made the most progress on new types of agentic commerce products? And then looking into '26, you most optimistic to sort of have even more progress in utility for users and your advertisers? And the second one is on YouTube. You know, we've seen a lot of the new content creation models like Genie, etcetera. Walk us through sort of the alphabet long term vision for how Genie and some of these content creation tools be integrated into YouTube over time? Sundar Pichai: Great. Thanks, Brian. First, maybe I'll take the agentic part first. I definitely think '25 was more about laying the foundation getting the models to start being more robust in agentic use cases. And obviously, coding is an area where progress was the most felt in areas like commerce, think we spent the year working with the ecosystem to develop the underlying protocol that's going to be needed for this agentic world. So I think the launch of, universal Commerce protocol at NRF in January with a bunch of partners, founding partners, I think has been super well received. So I'm excited now that we've laid the foundation of interoperability on which agent e commerce can work. And now we are integrating those experiences into Gemini AI mode and so on. So I think this is the year where you will see consumers actually being able to use all of this, and I'm excited that about the opportunity ahead. On YouTube, look, super excited by Jeannie and blown away by spent a lot of time creating these incredible worlds. I think it's going to have a wide level of applicability. I think an area where we shine in general is multimodality and representing the real world. And I think Genie is a further step in that direction in terms of building world models. All the innovation we are doing be it our Imagine Veo, Liria, Genie, all that work we bring in into our products and to our cloud customers. And YouTube is going to be a natural place for creators. We are going to keep incorporating these tools already creators are responding by adopting these, but we do want to put creators at the center of the experience and that's very, very important to us. And so it's for us making sure YouTube is a voice for creator expression is the foundation by which we will approach this. Brian Nowak: Great. Thanks, Sundar. Jim Friedland: Your next question comes from Eric Sheridan with Goldman Sachs. Your line is now open. Eric Sheridan: Thanks so much for taking the question. Two, if I could. Over the last couple of earnings calls, we've talked a lot about imbalances between demand and capacity for AI. Both internally and externally. With the step function change in app capital dollars you're projecting now in twenty six, Can you talk about the pathway to closing the gaps for the need for compute both internally and externally, and how to think about some of the outputs of closing that gap? As the year progresses. And again, the second part would be against that level of spend that you're now projecting for '26. How do you think about continuing to find operating efficiencies inside the business to fund those investment growth investments as well. Thank you. Sundar Pichai: Thanks, Eric. You are right. And we've been supply constrained even as we've been ramping up our capacity. Obviously, CapEx spend this year is an eye towards the future. And you have to keep in mind some of the time horizons are increasing in the supply chain, etcetera. So we are constantly planning for the long term and working towards that. And obviously, how we close the gap this year is a function of what we have done in the prior years. And so there is that time delay to keep in mind. I expect the demand we are seeing across the board across our services, what we need to invest for future work for Google DeepMind, as well as for cloud, I think, is exceptionally strong. And so I do to go through the year in a supply constrained way. And maybe Anat can touch on the second part. Anat Ashkenazi: Sure. Thanks, Eric, for the question. Now I've mentioned on one of the previous earnings call our approach to how we look at efficiency and productivity. And we don't view this as an episodic one time project or but rather how we run the business on a regular basis and always seek additional opportunities to drive efficiency across the business And certainly, with the demand we're seeing, whether it's from external customers or across the organization, the more capital we can free up within the organization to invest the better we can turn this flywheel of making investments to drive future growth. And we're doing this across the organization. Whether it's within our technical infrastructure, certainly when we invest at these amounts, we look at how we can ensure that we are the most efficient with every dollars that goes towards our technical infrastructure, There are scientific innovations that are with our part of that process. Technical innovation, as you know and we've mentioned before, we primarily focus on construction of our own data centers. We do partner with some external parties on lease on occasion, but most of our data center, we can start ourselves, and we ensure that we do it in the most efficient way in a way that matches our workloads and our needs. We look at coding productivity that Sundar mentioned in the past, about 50% of our codes are written by agents, coding agents. Which are then reviewed by our own engineers. But certainly, it helps our engineers do more, move faster, with the current footprint. We look at how we run the business across the organization. So using AI within the business to drive daily operations. It can be all the way from the engineering team to small teams within our back office, even with my finance team, for example, we deployed agents within our treasury organization. We're deploying agents within how we run how we pay and reconcile invoice So there are opportunities across the business that we evaluate on a regular basis to ensure we can free up more of that capacity to invest in our future. Jim Friedland: Your next question comes from Doug Anmuth with JPMorgan. Your line is now open. Doug Anmuth: Thanks for taking questions. I have two. Over the last couple of years, we've seen considerable large language model leapfrogging in many that to continue. What are the ways that Google can build and maintain its Gemini position around data and distribution and product integration And then how should we think about the potential for TPUs to move outside of Google Cloud and into external data centers and develop as an incremental revenue stream. Thank you. Sundar Pichai: Doug, look, I think you know, the LLM frontier, you know, I mean, it's been an exciting trajectory, and I think 2026 will continue to show that progress. We're obviously improving these models across many paradigms, right? On pre-training, post-training, test time compute, so on. And we are bringing multimodal models into the picture. Are bringing agentic capabilities. The coding area is showing a lot of progress. And obviously, integrating all of this together and offering a great customer experience for our products as well as through our APIs to our Cloud customers, to me, feels like there's a lot of headroom ahead. And as you've seen, our trajectory over the past two years in terms of how we've been making progress, I think we are in a very, very relentless innovation cadence, and I think we are confident about maintaining that momentum as we go through 'twenty six. In terms of TPUs, I would think about it as it's reflected in our overall part of what makes Google Cloud an attractive choice is the wide choice of accelerators we bring to bear here, and we meet customers in terms of what their needs are and the choice as well as other things we bring as part of Google Cloud, the end to end efficiencies in our data centers, all of that comes to bear. And that's what you see in the momentum in Google Cloud. And given the overall investment we are making, we expect to be able to drive momentum there. So that's how I would think about it. Doug Anmuth: Thank you, Sundar. Jim Friedland: Your next question comes from Mark Mahaney with Evercore. Your line is now open. Mark Mahaney: Thanks. Two questions. One, could you just comment a little bit on the YouTube ad revenue, that 9% year over year growth? It sounded like Direct Response was good and it sounded from search that retail came in relatively strong. It's little surprising that didn't kinda come through in the YouTube ads revenue growth. And then, Sundar, can I ask you to try to get ahead of a debate in the market, which is kind of maybe at a deep seek moment again? You talked earlier about Jim and I being the AI engine for the most for some of the most successful software SaaS companies out there in the world, and it just seems there's a market belief that these software companies are kinda losing seat power losing pricing power, it looks like it'd be a really terrible customer base. I can't imagine that's actually gonna happen. But could you just talk about it? You're at the front forefront of AI and the impact that's happening on software companies. Why wouldn't that be, or why would it be undermining the economics of your large software SaaS company base? Thanks. Philip Schindler: So, Mark, so first of all, thank you for the question. For the full year 2025, our YouTube's annual revenue surpassed $60 billion across ads and subscription. In Q4, YouTube ads was driven indeed by strong growth in Dive Response. On the brand side, as Anat shared, the largest factor negatively impacting the year over year growth rate was lapping the strong spend on U. S. Elections. We also saw a slight impact in other brand related verticals. But taking a step back, I think it's important to think about YouTube ads and subs holistically. Because when a user shifts from being an ad supported user to a YouTube Music and Premium customer, it has a slightly negative impact on YouTube ads revenues, but a positive impact on our business. And we had strong revenue growth in YouTube subscriptions this quarter, particularly in the YouTube Music and premium category. Maybe the interesting part is what we're actually excited about, our roadmap and brand, the opportunity on connected TVs, more innovative ad formats, For example, the shoppable mastheads I spoke about earlier. That we piloted during Cyber five. We're working really, really hard to further connect brands and creators, scaling sponsorships, enabling advertisers to showcase their products, their services during high visibility spotlight moments. We continue to expand the functionality of the creator partnership hub, making it a lot easier for brands to actually find creators and develop campaigns. We're heavily focusing on brand deals, on measurement efforts. So there's a lot of interesting work in the pipeline. And on top of that, we're actually see opportunity also for upside with performance There's a lot of momentum with demand gen adoption. Across small and medium advertisers. We're also excited about the opportunity for continued ads innovation and direct response, like, for example, shoppable formats, including in the living room. Which is then helping drive strength in retail, the continued momentum in shorts, and so on. So overall, we're we're quite excited. Yeah. Sundar Pichai: Great. And, Mark, on in terms of Gemini adoption and how what this moment means for etcetera. Look, at least from my vantage point, you know, I definitely, see We have very, very good SaaS customers who are leaders in their respective categories. And what I see the successful companies doing is they are definitely incorporating Gemini deeply in critical workflows be it on improving their product experience and driving growth or using it drive efficiency within their organizations. And I think I think it is an enabling tool, just like it has been an enabling tool for us across our products and services, be it Search, YouTube, etcetera. I think the companies who are seizing the moment think, have the same opportunity ahead. And at least we are excited about the partnerships we have there and the momentum if I look at it in terms of their tokens usage, etcetera, the growth has been very robust. In Q4. Mark Mahaney: Thank you. Jim Friedland: Your next question comes from Mark Shmulik with AllianceBernstein. Your line is now open. Mark Shmulik: Yes. Thanks for taking the questions. Two, if I may. The first for Anat is, can you talk a little bit more the relationship between investment levels and how you kind of expect core performance to trend? Is there, like, an operating income or a free cash flow objective that you solve towards, or how do you think about greenlighting resources and projects? And then the second question for all of you, you know, a year ago, we probably could have guessed the answer to this question. Given where we are today, for each of you, what keeps you up at night here as you think about the Google story, and what's next? Thanks. Anat Ashkenazi: Thanks, Mark. Let me start with a question on the investment framework. And it's an important one and as you can imagine, an important one for us as well. We have a highly rigorous framework that we use internally, where we look at all the needs for investment, whether it's from own organization or from external customers, and have an estimate of what that investment could potentially yield, obviously not just near term but long term as well. So we take that into consideration when we make the following decisions. The first one is the total investment that we make across the company. This was, for example, in 2025, the $91 billion we invested in CapEx and our estimate for CapEx investment this year. So what's the total envelope that wanna invest to ensure that we can drive both near term and long term growth for the company? And then the second way we use that framework is to just allocate these funds across the organization, determine where we should make these investments. And throughout the year, as you can imagine, we always look to understand where things are moving, whether it's a external dynamics or internal dynamics. And I've mentioned some of the supply chain pressures we're seeing externally. So we look at this with a highly rigorous framework. To make sure that we're making the right decision. It was exciting to see the fact that we're already monetizing. And you saw it in the results that we've just issued this quarter, the investments that we've made in AI. It's already delivering results across the business. I know in cloud, it's very obvious external, but you've heard the comments on the success we're seeing in search, the comments from Sundar and from Philip, and then the frontier model development that really serves as the foundation for the organization. We then also look at just the cash flow, cash flow generation, the health of our financials and the balance sheet, that's important as well. So we take that into consideration when we make the decision about the overall level of investment. We wanna make sure we do it in a fiscally responsible way and that we invest appropriately, but we do it in a way that maintains a very healthy financial position for the organization. Sundar Pichai: And yeah, maybe I can answer on what keeps us up at night. Look. I think overall, we've been on this AI first trajectory for over a decade now, and it's it's it's what we've been methodically thinking our way through. It's the reason why we've been working on TPUs for over a decade, as an example. But I think specifically at this moment, maybe the top question is definitely around capacity, all constraints be it power, land, supply chain constraints, How do you ramp up to meet this extraordinary demand for this moment? Get our investments right for the long term, and do it all in a way that we are driving efficiencies and doing it in a world class way. So that's where I think we are meeting the moment well and it's definitely an area where I'm spending a lot of time on. Jim Friedland: Your next question comes from Michael Nathanson with MoffettNathanson. Your line is now open. Michael Nathanson: Thanks. I have one for Sundar and one for Anat. Sundar, you mentioned universal commerce protocol a bunch of times. I wonder if you could spend some time talking about the rationale for developing it. The opportunity that you see it solves for, what it means for the prop discovery funnel for consumers and for not any color you can provide on a CapEx guide between longer duration assets like buildings, and infrastructure and shorter cycle assets like technical equipment, that'd be helpful. Thanks. Sundar Pichai: Thanks, Michael. Obviously, people go through a lot of commercial journeys across many of our surfaces, search, YouTube, Gemini app, and so on. So I think there's as well as we support through cloud and ads, our entire retail partners as well. And the opportunity to improve the experience, I think, can be a huge foundational uplift here. But it's important to be approaching it, keeping in mind that our users, as well as merchants here and figuring out that value part of what's been good in designing the Universal Commerce protocol is it makes it much easier for users to complete transactions but at the same time, it allows merchants to help showcase range of their offerings, if they want to make promotions, etcetera. So all of that is built into the protocol. And I think you have to get that value prop for the ecosystem right to make the experience better. And so it's foundational. More importantly, we are now implementing the protocols and are Gemini models are making progress in those agentic capabilities. I think so I'm excited about a future where as people are going through discovery, searching, finding new things, if they're interested in acting upon it, all of that is seamless. And so it overall creates an expansionary moment. Anat Ashkenazi: And the question with regards to the CapEx and the kind of what makes up the total that we've announced for this year and last year. Approximately 60% of our investment in 2025 and it's going to be fairly similar in 2026, went towards machines, so the servers. Then 40% is what you referred to as long duration assets, which is our data centers and networking equipment. And I think you're probably referring to the depreciation delta between them, those long term duration assets depreciate over the building could be forty years or longer. Other components may be may less than that. Another important component is how we allocate the CapEx. And we've commented in the past about the allocation of our ML compute across the business. And for 2026, just over half of our ML compute is expected to go towards the cloud business. Michael Nathanson: Thank you so much. Jim Friedland: Your next question comes from Ross Sandler with Barclays. Your line is now open. Ross Sandler: Great. Just a question on the native Gemini $750,000,000 So we added 100,000,000 MAUs in the fourth quarter. Could you just talk high level about usage and retention of native Gemini? And is this $7.50 the right way to measure your progress against companies like Chachi BT or is there another cohort of users that aren't in that $7.50 that maybe we should also consider Thanks a lot. Sundar Pichai: Ross, I think, you know, we definitely saw I would say, extraordinary period of growth in Q4 for Gemini App. It's not just the growth in monthly active users, but there is definitely there was a sharp increase in engagement per user on the app. All the metrics be it active usage, the intensity of usage, retention, all showed distinct progress across iOS web, Android, etcetera, and geographically, globally. Definitely all the product experience improvements, the work we did with Nano Banana, the progress with the Gemini models all translated into strong momentum. And that momentum is continuing. So we are excited about that, and we'll continue to invest. Obviously, there are many people who are getting a deeply AI native experience in the context of AI mode in Search as well, And, you know, we are definitely seeing strong growth and progress. And the introduction of Gemini three in AI mode was a very positive driver as well. And obviously, we'll continue to evolve these experiences, and I'm excited about the opportunities there. Ross Sandler: Thank you. Jim Friedland: Your next question comes from Ken Gawrelski with Wells Fargo. Your line is now open. Ken Gawrelski: Thank you very much. Two, if I may, both on search. First, could you walk us through how you are evolving your views on the monetization of AI search activity, given the more conversational nature and longer periods of engagement per session, Consumer utility increasingly, is increasingly driven by the on platform results, not specifically the link outs and referrals. In that construct, how do you think about increasing the revenue opportunity to match the consumer utility? And is this increasingly where premium subscriptions play? And then question two, and it's related. As you think about partnerships such as the new Apple partnership on Siri. How do you think about the right way to align for success with those partners Previously, as disclosed in the DOJ documents, etcetera, It was a revenue share relationship, but now if you think about the utility that you're driving through AI search and through, you know, and through Gemini on those platforms, it may be less related to the actual search revenue. Could you just talk a little bit about how you align with partners for success there? Thank you. Philip Schindler: First of it may be worthwhile to say that the acceleration we saw in the search was not due to a single driver, but was really the result of many different parts of our business showing strength and working well together. And maybe I quickly add the vertical perspective, retail finance, health drove actually the greatest contribution to search More specifically to your question, the ongoing innovation is Revenue, though nearly every major vertical actually accelerated in Q4. as you know, core to what we do and the enhancements to the user and the advertiser experience really continue to drive our performance. And we make hundreds of these changes every quarter We see AR overviews and AR mode continue to drive greater search usage and growth in overall queries, including important and commercial queries. Gemini based improvements in search ads help us better match queries and craft creatives for advertisers. I talked about the understanding of intent and how this has significantly expanded our ability to deliver ads on longer and more complex searches. That were frankly previously difficult to monetize. AI Max, for example, is already used by hundreds of advertisers and continues to unlock billions of net new queries in that sense. We see strength with SMB advertisers expanding their budgets and the adopting automation tools leading to better ROI. On the creative side. We're using Gemini to generate millions of creative assets via text customization in AI Max and P Max. And so on. So we're we're very pleased with what we're seeing here. Jim Friedland: And our last question comes from Justin Post with Bank of America. Your line is now open. Justin Post: Great. Just want to follow-up on the Gemini app. Obviously, great growth there. Are you seeing any cannibalization of search as far as that activity as people start using that app more? And then second, on monetization, where are you on that? And with AgenTic and other ads coming, could that be incremental to your growth over the next few years? Thank you. Sundar Pichai: Right now, overall, look, I think we are giving people choice People are obviously using Search, experiencing AI overviews and AI more part of it, and Gemini app as well. And the combination of all of that, I think, creates an expansionary moment. I think it's expanding the type of queries people do with Google overall. And so overall, you know, some of it all is what we see as a growth opportunity. And we haven't seen any evidence of cannibalization there. And maybe Philip can comment on the monetization. Yeah. Think Philip Schindler: Sundar previously commented on AgenTig and how we think about it. And look, in general, as with all of our products, we really focus first and foremost on creating a great user experience. And we have excited about where we are with the ads and AI overviews and early experiments in AI mode, including innovations like direct offer and our road map for the future. In terms of the Gemini app, today, we are focused on a free tier and subscriptions and seeing great growth, as Sundar discussed. But ads have always been part of scaling products to reach billions of people, and if done well, ads can be really valuable and helpful commercial information and the right moment, we'll share any plans. But as we've said, we're not rushing anything here. Jim Friedland: Thank you. Operator: And that concludes our question and answer session for today. I'd like to turn the conference back over to Jim Friedland for any further remarks. Jim Friedland: Thanks everyone for joining us today. Look forward to speaking with you again on our first quarter 2026 call. Thank you, and have a good evening. Operator: Thank you, everyone, This concludes today's conference call. Thank you for participating. You may now disconnect.

Alphabet Bets $185B on Gemini, Agentic Commerce and Enterprise AI | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. Management framed the commitment during the call with analysts as a direct response to sustained demand for artificial intelligence (AI) compute across consumer products, enterprise platforms and cloud infrastructure. Chief Executive Sundar Pichai told analysts that Alphabet is already operating under capacity pressure. "We've been supply constrained even as we've been ramping up our capacity," he said, adding that the company expects to remain constrained through much of 2026 as training, inference and enterprise workloads continue to compound. The usage metrics are rising quickly. Gemini now processes more than 10 billion tokens per minute via direct APIs, up from 7 billion last quarter. The Gemini app has surpassed 750 million monthly active users. Gemini Enterprise has already sold more than 8 million paid seats in roughly four months. Across consumer services, Alphabet reported more than 325 million paid subscriptions, while Google Cloud backlog climbed to $240 billion, up 55% sequentially. Consolidated revenues touched $113.8 billion in the quarter, up 18% year on year. Shares were down about 1.5% in after-hours trading. Pichai emphasized that Gemini's momentum is marked by strong enterprise demand. More than 120,000 organizations now use Gemini, and Alphabet said 95% of the top 20 software-as-a-service (SaaS) companies and over 80% of the top 100 have integrated Gemini into their products or workflows. And in response to analyst queries about the pressures facing SaaS firms, rather than portraying AI as destabilizing software economics, Pichai described Gemini as an enabling layer. "I definitely see we have very, very good SaaS customers who are leaders in their respective categories," he said. "What I see the successful companies doing is they are definitely incorporating Gemini deeply in critical workflows, be it on improving their product experience and driving growth, or using it to drive efficiency within their organizations." A key theme during the quarter and during the call was Alphabet's push toward agentic commerce, where AI systems progress from recommendation engines to transaction facilitators. Pichai said 2025 focused on groundwork, including developing the universal commerce protocol with partners. The next phase integrates those capabilities directly into Gemini, AI Mode and Search. Consumers will be able to move from discovery to purchase inside conversational experiences, with new checkout flows already being introduced for select merchants. "This is the year where you will see consumers actually being able to use all of this," Pichai said, referring to the rollout of agentic shopping across Alphabet's surfaces. On the advertising side, Google Services leadership outlined early monetization efforts, including Direct Offers placed beneath AI responses and agentic tools that help advertisers generate campaigns and creative assets in real time. Advertisers used Gemini to create nearly 70 million creative assets in Q4 alone. Even with AI commanding attention, Alphabet's traditional engines remain central to performance. Search revenue grew 17% year over year, driven by strength across retail, finance and health. AI Overviews and AI Mode are extending session length and complexity, with AI Mode queries now averaging three times longer than conventional searches and often leading to follow-up questions. Management said Gemini-based improvements are materially increasing ad relevance while reducing irrelevant impressions. Small and mid-sized businesses are expanding budgets as automation improves return on investment, and advertisers increasingly rely on AI to assemble creatives at scale. Google Services revenue reached $96 billion for the quarter. Google Cloud revenue rose 48% to $17.7 billion, supported by enterprise AI infrastructure and solutions. Video continues to operate as both growth engine and commerce surface. YouTube surpassed $60 billion in annual revenue across advertising and subscriptions. Direct-response ads drove Q4 growth, while subscription revenue advanced, particularly in YouTube Music and Premium, even as election-related comparisons weighed on brand advertising. Executives highlighted momentum in Shorts, connected-TV formats and shoppable ad experiences, including interactive mastheads that allow viewers to browse products and send purchase links to their phones. Alphabet also confirmed deepening collaboration with Apple, serving as its preferred cloud provider while jointly developing next-generation foundation models based on Gemini technology. The partnership extends Alphabet's AI footprint beyond its own devices and services. Looking forward, executives repeatedly returned to supply constraints as the defining operational challenge. Power availability, data center construction timelines and component lead times will shape how quickly Alphabet can convert demand into deployed capacity. Chief Financial Officer Anat Ashkenazi said roughly 60% of capital spending continued to go toward servers, with the remaining 40% directed to data centers and networking. She stressed that efficiency efforts are ongoing, from model optimization that reduced Gemini serving costs by 78% in 2025 to broader productivity initiatives across engineering and finance. Pichai framed the moment as both opportunity and obligation. Compute capacity, he said, is what "keeps us up at night." Alphabet's response is to invest and integrate and treat AI as infrastructure.

Google Soars High as AI Investments Bear Fruit in Search and Cloud Business

The results are coming at a time when investors are questioning tech companies on the payoffs from massive AI spends over the past several quarters Google's parent Alphabet announced quarterly earnings on a day when global stock markets turned jittery over the potential impact on software development of the AI plug-ins revealed by Anthropic. Their stock, which soared over 20% since its last earnings, appears to be sitting pretty with search revenue spiking 17% on top of a 14 percentage point lift in cloud income. Nay-sayers from exactly a year ago when Alphabet stocks took a nosedive over reports of a steep spending plan in AI and a slowdown in Google Cloud revenues, may be ready to overturn their concerns now. To the extent that they might be willing to support Sundar Pichai's vision now, especially since Alphabet has now delivered red-hot Q4 numbers. While search revenues stood at 17%, up from 15% in the third quarter and revenue from the cloud business growing at a robust 48%, the real winner is the way in which Google has adopted AI into its own world. In other words, they are now enjoying the fruits of investing big in AI, even if these were then considered a late reaction to the growing clout of OpenAI and Microsoft. The narrative around AI killing search traffic and growth that emanated when ChatGPT was spreading its wings, Google seems to have put these concerns to rest. The growth in search income over the past couple of quarters suggests that Google has improved the effectiveness of their ads with sharper targeting via more complex search queries. In fact, Alphabet's chief business officer Phillip Schindler took pains to explain this phenomenon to the analysts on an earnings call. "Gemini's understanding of intent has increased our ability to deliver ads on longer, more complex searches that were previously challenging to monetize," Schindler said. CEO Sundar Pichai too added his two cents to the story by revealing that investments in AI and infrastructure were now driving revenue and growth across the board. The company also noted that Capex could as much as double this year as they deepen these investments to remove any constraints on compute capacity. Industry watchers have predicted that Big Tech rivals could collectively shell out more than $500 billion on AI and its associated activities during 2026. While Meta has already announced that they have hiked capital investment for AI development by 73%, Microsoft also reported record numbers in this regard in the last quarter. The irony of this development is that additional investments by these companies are coming at a time when investors have been questioning the resultant payoffs. This is where Google has bucked the news cycle in some ways. Alphabet stock has surged 75% since January 2025, barring very brief spells of sell-offs triggered mostly by geopolitics. If anything Google's resurgence could be just the story of how AI can help a business if those in charge consider it a tool and not as some sort of magic wand. From a moment in history where everyone agreed that AI chatbots could kill search, today it is proven that Google has used AI effectively to place ads around the most complex of search queries. Similarly, their Q4 cloud revenues show a run-rate of $71 billion, up from just about $20 million in 2021, Google again being a late entrant into the field after Amazon (AWS) and Microsoft (Azure). Juxtapose this figure with the $132 billion run rate achieved by market leader AWS in their Q3 and the story crystallises itself better. (Just so that you know, Amazon will be delivering fourth quarter results later tonight). The question though is would concerns continue around the AI bubble and will this impact Alphabet in the upcoming quarters? Of course, the nay-sayers may still point out that Google continues to operate at margins below those of their larger rivals. Alphabet reported operating margins of 30% this quarter over 23.7% achieved in Q3, but market analysts believe that they must do better on this front in order to remain in the cloud infrastructure race. That the Alphabet stock lost about a percentage point in after-hours trading last night may be more of a reaction to the larger sell-off over fears of AI rendering IT services redundant. In fact, some analysts believe that people are getting tired of the AI refrain though they also note that Alphabet's decision to double capex to between $175 billion to $185 billion in 2026 for enhancing compute capacity might have contributed to the falling sentiment. However, we cannot also ignore the fact that the capex projection seen in the context of their revenue generation of $164 billion in 2025 does present a cause for concern. Alphabet, which already has a sizeable debt, may have to borrow more over time. The company also treats the costs on its DeepMind AI research in a special expense line that doubled to $5.9 billion in Q4. In conclusion, while the overall picture looks bright with search revenues back to decent growth and cloud incomes also hitting a peak, there are reasons why the market remains jittery. We would say this is more to do with the unbridled spending on expanding AI training and inference capacity than anything specific to Google's line of business. However, that's a bubble that we will take up some other time. For now, all we would say is "Bravo Sundar Pichai. May your instinct continue to deliver such great outcomes."

Google's quarterly results paint a picture of an internet powerhouse getting stronger in AI age

Google's latest quarterly report provided further evidence that its internet empire is withstanding an artificial intelligence shakeup that's turning into another potential boon for the company. The numbers released Wednesday marked Google's third consecutive quarter of digital ad growth of more than 10 per cent from the previous year, while also posting more than 30 per cent sales growth in its division that powers data centers for AI services. Those increases during the October-December period propelled Google's corporate parent Alphabet Inc. well past the earnings forecasts of stock market analysts. Alphabet's fourth-quarter profit rose 30 per cent from the prior year to US$34.5 billion, or US$2.82 per share, while revenue climbed 18 per cent to US$113.8 billion. The collective momentum of Google's main business in search and advertising and the still-nascent AI field indicates a company born during the late 1990s internet boom is becoming even stronger during another technology phenomenon nearly 30 years later. "Search saw more usage than ever before, with AI continuing to drive an expansionary moment," Alphabet CEO Sundar Pichai said. Google's successful evolution has helped drive up Alphabet's stock price nearly 60 per cent in the past five months, giving it a US$4 trillion market value. That may have raised the bar for Alphabet to impress investors as the company's shares dipped 1 per cent in extended trading following the report. Apple, also currently worth US$4 trillion, thinks so highly of Google's AI that the iPhone maker recently struck a deal to use Google's Gemini technology in a long-delayed upgrade to its virtual assistant, Siri. Google is also embedding more of its Gemini AI into its long-dominant search engine, Gmail and Chrome browser as it tries to avoid complacency and being outmaneuvered by up-and-coming companies such as OpenAI, Anthropic and Perplexity. To meet the challenge, Alphabet has been on a spending spree to expand its AI capacity. After pouring US$91 billion into capital expenditures devoted mostly to AI last year, the Mountain View, California company is expected to spend even more this year. Its capital expenditure budget has ballooned from about US$30 billion annually since 2022 when OpenAI released its ChatGPT chatbot to much acclaim, prompting Google to pull out all the stops to catch up. Google's thriving digital ad business is helping finance the spree. Its digital ad sales totaled US$82.3 billion in the fourth quarter, up 14 per cent from the previous year. Google Cloud, which oversees the data centers behind many AI services, posted revenue of US$17.7 billion, a 48 per cent increase. Search saw more usage than ever before, with AI continuing to drive an expansionary moment