Alphabet reported strong results for the fiscal year ending December 31, 2025. Annual revenue reached $368.2 billion, representing a 16% year-over-year increase, while diluted EPS grew to $8.24, up 22% from the previous year. Growth was primarily driven by the continued acceleration of Google Cloud, which saw 34% revenue growth as enterprise AI adoption scaled, alongside steady mid-teens growth in Search and YouTube advertising.
Note: Google's FY'25 ended on December 31, 2025.
Alphabet recently completed the full-scale rollout of Gemini 2.0, its latest multimodal AI model, across its entire productivity suite and Search Generative Experience (SGE). This strategic pivot aims to defend its search moat against emerging AI-native competitors while simultaneously increasing the Average Revenue Per User (ARPU) for Google Workspace through premium AI add-on subscriptions. Early data suggests a 12% improvement in search ad click-through rates for queries processed through the new generative interface.
Below are key drivers of Google's value that present opportunities for upside or downside to the current Trefis price estimate:
For additional details, select a driver above or a division from the interactive Trefis split for Google at the top of the page.
Alphabet is a global technology conglomerate that dominates the digital advertising market through Google Search and YouTube, while rapidly expanding its footprint in enterprise infrastructure via Google Cloud and autonomous technology through Waymo.
Google's massive user data and integrated ecosystem make its advertising business the most resilient and profitable segment in the technology sector.
Google Search handles over 90% of global search queries, creating a massive, high-intent data loop that is difficult for competitors to replicate. This installed base provides the necessary scale to train AI models more efficiently than startups, ensuring the platform remains the primary destination for performance-based marketing.
YouTube functions as both a social network and a streaming service, capturing the largest share of American TV viewing time among streaming platforms. Its dual-revenue model—comprising high-margin advertising and a growing subscription base (Premium/Music/TV)—creates a powerful moat and diversified cash flow.
The industry is shifting from keyword-based search to conversational, agentic AI. Alphabet is aggressively positioning itself as the leader in this transition by embedding its Gemini models into every layer of the tech stack. This trend threatens traditional SEO models but offers Alphabet the chance to capture higher-value commercial intent through more personalized results.
Alphabet is increasingly relying on its sixth-generation Tensor Processing Units (TPUs) to offset the massive compute costs associated with AI. By designing its own chips, the company reduces its dependence on external hardware vendors and improves the price-performance ratio for its Cloud customers, a critical strategic shift for long-term margin preservation.
Waymo has transitioned from an experimental project to a meaningful contributor to the "Other Bets" segment, now providing over 150,000 paid weekly trips in major U.S. markets. The successful scaling of autonomous ride-hailing represents a long-term trend that could eventually provide a third major pillar of revenue alongside Ads and Cloud.
