Alphabet Q4 Earnings Call Highlights

Alphabet NASDAQ: GOOG executives highlighted accelerating growth across Search, Cloud, and subscriptions during the company’s fourth quarter 2025 earnings call, pointing to expanding AI-driven user engagement and a sharp increase in capital investment plans to meet rising demand for compute capacity.

Quarterly results and companywide metrics

Alphabet reported consolidated fourth-quarter revenue of $113.8 billion, up 18% year over year (or 17% in constant currency), with management attributing the acceleration to strength in Search and Google Cloud. For the full year 2025, Alphabet said revenue reached $403 billion, up 15%, marking the first time annual revenue exceeded $400 billion.

Net income for the quarter rose 30% to $34.5 billion, while earnings per share increased 31% to $2.82. Operating income increased 16% to $35.9 billion, and operating margin was 31.6%. CFO Anat Ashkenazi noted results were negatively impacted by a $2.1 billion stock-based compensation charge tied to a higher Waymo valuation following a new investment round, with most of that charge reflected in R&D expense.

Alphabet generated record operating cash flow of $52.4 billion in the quarter and $164.7 billion for the full year, translating into free cash flow of $24.6 billion for Q4 and $73.3 billion for 2025. The company ended the quarter with $126.8 billion in cash and marketable securities and $46.5 billion in long-term debt. Alphabet also returned capital through $5.5 billion of share repurchases and $2.5 billion of dividend payments in Q4.

Search momentum, AI Mode engagement, and early monetization tests

CEO Sundar Pichai said Search revenue grew 17% in the quarter and described the period as “an expansionary moment” driven by AI features. Alphabet said it shipped over 250 product launches within AI Mode and AI Overviews in the quarter, including integrating Gemini 3 into Search experiences and upgrading AI Overviews to Gemini 3.

Management cited several engagement trends tied to AI Mode and AI Overviews:

• In the U.S., daily AI Mode queries per user doubled since launch, according to the company.
• Queries in AI Mode are three times longer than traditional searches, and a “significant portion” now lead to follow-up questions.
• Nearly one in six AI Mode queries are non-text (voice or images), and Circle to Search is available on more than 580 million Android devices.

On advertising, Chief Business Officer Philipp Schindler said Google Services revenue was $96 billion in Q4, up 14%, led by accelerated Search growth. Search and other advertising revenue rose to $63.1 billion, with “broad strength across all major verticals,” and retail cited as particularly strong.

Schindler said Alphabet is experimenting with monetization within AI Mode, including testing ads below the AI response, and announced a pilot called Direct Offers designed to show exclusive retailer offers to shoppers “ready to buy” in AI Mode. Pichai also emphasized Alphabet’s work on an “open standard for agentic commerce,” the Universal Commerce Protocol, intended to make it easier for users to complete transactions while allowing merchants to showcase promotions and offerings.

Google Cloud acceleration, backlog surge, and Gemini Enterprise adoption

Google Cloud revenue increased 48% to $17.7 billion in Q4, and operating income rose to $5.3 billion, more than doubling year over year. Cloud operating margin expanded to 30.1% from 17.5% a year earlier. Ashkenazi said results reflected strong demand for enterprise AI products, including growth in AI infrastructure (TPU and GPU deployments) and AI solutions built on models such as Gemini 3.

Alphabet reported Cloud backlog increased 55% sequentially and more than doubled year over year to $240 billion. Pichai said the backlog represented “a wide breadth of customers driven by demand for AI products.”

Among operational and adoption metrics, executives said:

• Alphabet has sold more than eight million paid seats of Gemini Enterprise to more than 2,800 companies, and said the platform managed over five billion customer interactions in Q4.
• More than 120,000 enterprises use Gemini, including references to AI startups and large enterprises, and the company said 95% of the top 20 and over 80% of the top 100 SaaS companies use Gemini.
• Revenue from products built on generative AI models grew nearly 400% year over year in Q4, according to Pichai.

Both Pichai and Schindler highlighted a collaboration with Apple in which Alphabet will serve as Apple’s “preferred cloud provider” and work to develop “the next generation of Apple foundation models” based on Gemini technology.

YouTube: ads, subscriptions, Shorts, and creator AI tools

YouTube advertising revenue grew 9% year over year to $11.4 billion, driven by direct response advertising. Ashkenazi and Schindler said growth was affected by lapping strong U.S. election-related spending in Q4 2024. Schindler also noted network advertising revenue declined 2% to $7.8 billion.

Pichai said YouTube’s annual revenue surpassed $60 billion across ads and subscriptions. Executives stressed subscription momentum, including continued strength in YouTube Music and Premium, and upcoming new YouTube TV plans with “over 10 genre-specific packages.”

On product trends, management cited YouTube’s position as the number one streamer in the U.S. for nearly three years (per Nielsen), and said Shorts averages over 200 billion daily views. Pichai also said that in December, over 1 million channels per day used new AI creation tools, while more than 20 million viewers used an “Ask” tool powered by Gemini.

Waymo investment round, autonomous trip milestones, and 2026 CapEx outlook

Pichai said Waymo completed its largest investment round to date and has surpassed 20 million fully autonomous trips, providing more than 400,000 rides per week. He added that Waymo’s sixth market, Miami, launched two weeks prior, and the company plans expansion to multiple cities in the U.S. as well as in the U.K. and Japan. Ashkenazi said Alphabet funded a “significant portion” of the $16 billion Waymo investment round.

Looking ahead, Alphabet guided to a substantial increase in capital spending. Management said 2026 CapEx is expected to be in the range of $175 billion to $185 billion, ramping through the year, as the company invests in AI compute capacity for DeepMind, Search and ads improvements, Cloud demand, and Other Bets. Ashkenazi said supply availability, component pricing, and payment timing could cause variability in reported CapEx. She added that, similar to 2025, approximately 60% of investment is expected to go toward servers and 40% to data centers and networking equipment, and that just over half of Alphabet’s ML compute in 2026 is expected to go to the Cloud business.

Executives also flagged continued depreciation pressure from infrastructure spending. Ashkenazi said depreciation increased by nearly $6 billion in 2025 to $21.1 billion and is expected to accelerate in Q1 and “meaningfully increase” for the full year 2026.

About Alphabet NASDAQ: GOOG

Alphabet Inc NASDAQ: GOOG is a multinational technology holding company headquartered in Mountain View, California. Formed in 2015 through a corporate restructuring of Google, Alphabet serves as the parent to Google LLC and a portfolio of businesses collectively known as “Other Bets.” Google was originally founded in 1998 by Larry Page and Sergey Brin; Alphabet is led by CEO Sundar Pichai, who oversees Google and the broader company while the founders remain prominent shareholders and influential figures in the company’s history.

Alphabet’s core business centers on internet search and advertising, with Google Search and the company’s ad platforms (including Google Ads and AdSense) generating the majority of revenue by connecting advertisers with consumers worldwide.

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