Alphabet (GOOGL) Q4 FY25 earnings call: guidance and Q&A

What progress was made in agentic commerce in 2025 and what are the 2026 opportunities? How will new content creation models like Genie integrate into YouTube?

Sundar explained that 2025 focused on laying the foundation for agentic commerce, including developing the Universal Commerce Protocol with partners. He expects 2026 to see consumers actively using these features. For YouTube, he highlighted Genie's potential for building worlds and emphasized integrating AI tools to empower creators, ensuring YouTube remains a platform for creator expression.

“I think this is a year where you will see consumers actually being able to use all of this, and I'm excited about the opportunity ahead.”

asked by Brian Nowak · answered by Sundar Pichai

How will the increased 2026 CapEx close the compute gap, and how will operating efficiencies fund these investments?

Sundar stated that despite the significant CapEx, demand for AI compute is exceptionally strong, and they expect to remain supply-constrained throughout 2026. Anat added that efficiency is an ongoing process, not a one-time effort, focusing on technical infrastructure, coding productivity (50% of code by agents), and using AI within internal operations to free up capital for future growth.

“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 expect to go through the year in a supply-constrained way.”

asked by Eric Sheridan · answered by Sundar Pichai

How will Google maintain Gemini's leadership in LLMs? What is the potential for TPUs to be an incremental revenue stream outside Google Cloud?

Sundar expressed confidence in maintaining Gemini's momentum through relentless innovation in pretraining, post-training, multimodality, and agentic capabilities. He clarified that TPUs are an integral part of Google Cloud's attractiveness, offering a wide choice of accelerators and end-to-end efficiencies within their data centers, contributing to Cloud's strong momentum rather than being a separate external revenue stream.

“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 '26.”

asked by Douglas Anmuth · answered by Sundar Pichai

Why was YouTube ad revenue growth 9% despite strong retail? How does Gemini impact the economics of large SaaS companies?

Philipp explained that YouTube ad growth was driven by direct response, with brand advertising negatively impacted by lapping strong U.S. election spend. He emphasized viewing YouTube ads and subscriptions holistically. Sundar stated that successful SaaS companies are deeply incorporating Gemini into critical workflows to improve products and drive efficiency, seeing it as an enabling tool that offers significant opportunity.

“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, et cetera. I think the companies who are seizing the moment, I think, have the same opportunity ahead.”

asked by Mark Stephen Mahaney · answered by Sundar Pichai

Describe the framework for investment levels and core performance. What keeps management up at night?

Anat detailed a rigorous internal framework for total investment and allocation, aiming to drive both near-term and long-term growth while maintaining financial health. Sundar identified compute capacity as the primary concern, specifically the challenges of ramping up to meet extraordinary demand, managing supply chain constraints, and driving efficiencies in a world-class way.

“But I think specifically at this moment, maybe the top question is definitely around compute capacity, all the 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.”

asked by Mark Shmulik · answered by Sundar Pichai

What is the rationale and opportunity for the Universal Commerce Protocol? How is the CapEx guide split between long-duration and shorter-cycle assets?

Sundar explained the Universal Commerce Protocol aims to improve commercial journeys across Google surfaces and for retail partners, making transactions seamless and allowing merchants to showcase offerings. Anat clarified that approximately 60% of CapEx in 2025 (and similar for 2026) went towards servers, and 40% towards longer-duration assets like data centers and networking equipment.

“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 the range of their offerings, if they want to make promotions, et cetera.”

asked by Michael Nathanson · answered by Sundar Pichai

Is the Gemini app (750M MAU) cannibalizing search activity? What is the monetization strategy for the Gemini app?

Sundar stated that the combination of search, AI Overviews, AI Mode, and the Gemini app creates an expansionary moment, expanding the types of queries people do with Google overall, and they have not seen any evidence of cannibalization. Philipp added that the focus for the Gemini app is currently on the free tier and subscriptions, but ads can be valuable commercial information, and they will share plans at the right moment without rushing.

“I think it's expanding the type of queries people do with Google overall. And so overall, some of it all is what we see as a growth opportunity, and we haven't seen any evidence of cannibalization there.”

asked by Ross Sandler · answered by Sundar Pichai