Alphabet 2025 Q3 Earnings Call

>> Operator: WELCOME, EVERYONE.

THANK YOU FOR STANDING BY FOR

THE ALPHABET THIRD QUARTER 2025

EARNINGS CONFERENCE CALL. AT

THIS TIME, ALL PARTICIPANTS ARE

IN A LISTEN-ONLY MODE. AFTER THE

SPEAKER PRESENTATIONS, THERE

WILL BE A QUESTION-AND-ANSWER

SESSION. TO ASK A QUESTION

DURING THE SESSION, YOU WILL

NEED TO PRESS *1 ON YOUR TELEPH

I WOULD NOW LIKE TO HAND THE

CONFERENCE OVER TO YOUR SPEAKER

TODAY, JIM FRIEDLAND, HEAD OF

INVESTOR RELATIONS. PLEASE GO A.

>> Jim Friedland: THANK YOU.

GOOD AFTERNOON, EVERYONE, AND

WELCOME TO ALPHABET'S THIRD

QUARTER 2025 EARNINGS CONFERENCE

CALL. WITH US TODAY ARE SUNDAR

PICHAI, PHILIPP SCHINDLER, AND

ANAT ASHKENAZI. NOW, I'LL

QUICKLY COVER THE SAFE HARBOR.

SOME OF THE STATEMENTS THAT WE

MAKE TODAY REGARDING OUR

BUSINESS, OPERATIONS, AND

FINANCIAL PERFORMANCE MAY BE

CONSIDERED FORWARD-LOOKING. SUC

STATEMENTS ARE BASED ON CURRENT

EXPECTATIONS AND ASSUMPTIONS

THAT ARE SUBJECT TO A NUMBER OF

RISKS AND UNCERTAINTIES. ACTUAL

RESULTS COULD DIFFER MATERIALLY.

PLEASE REFER TO OUR FORMS 10-K

AND 10-Q, INCLUDING THE RISK

FACTORS. WE UNDERTAKE NO

OBLIGATION TO UPDATE ANY

FORWARD-LOOKING STATEMENT.

DURING THIS CALL, WE WILL

PRESENT BOTH GAAP AND NON-GAAP

FINANCIAL MEASURES. A

RECONCILIATION OF NON-GAAP TO

GAAP MEASURES IS INCLUDED IN

TODAY'S EARNINGS PRESS RELEASE,

WHICH IS DISTRIBUTED AND

AVAILABLE TO THE PUBLIC THROUGH

OUR INVESTOR RELATIONS WEBSITE

LOCATED AT ABC.XYZ/INVESTOR. OUR

COMMENTS WILL BE ON

YEAR-OVER-YEAR COMPARISONS

UNLESS WE STATE OTHERWISE. AND

NOW, I'LL TURN THE CALL OVER TO.

TO SUNDAR.

>> Sundar Pichai: THANK YOU,

JIM. GOOD AFTERNOON, EVERYONE,

AND THANKS FOR JOINING US. THIS

WAS A TERRIFIC QUARTER FOR

ALPHABET, DRIVEN BY DOUBLE-DIGI

GROWTH ACROSS EVERY MAJOR PART

OF OUR BUSINESS. WE'RE SEEING A

NOW DRIVING REAL BUSINESS

RESULTS ACROSS THE COMPANY. WE

DELIVERED OUR FIRST-EVER $100

BILLION DOLLAR QUARTER. FIVE

YEARS AGO, OUR QUARTERLY REVENU

WAS AT $50 BILLION. OUR REVENUE

NUMBER HAS DOUBLED SINCE THEN,

AND WE'RE FIRMLY IN THE

GENERATIVE AI ERA. IN PARALLEL,

WE'VE BUILT FOR THE LONG TERM

AND DIVERSIFIED, WITH SUCCESSFUL

BUSINESSES IN CLOUD, YOUTUBE,

AND SUBSCRIPTIONS. OUR MOMENTUM

IS STRONG AND WE'RE SHIPPING AT

SPEED. AS JUST A FEW EXAMPLES:

OUR FIRST PARTY MODELS, LIKE

GEMINI, NOW PROCESS SEVEN

BILLION TOKENS PER MINUTE VIA

DIRECT API USE BY OUR CUSTOMERS

THE GEMINI APP NOW HAS OVER 650

MILLION MONTHLY ACTIVE USERS,

AND QUERIES INCREASED BY 3X FRO

CLOUD HAD ANOTHER GREAT QUARTER

OF ACCELERATING GROWTH WITH AI

REVENUE AS A KEY DRIVER. CLOUD

BACKLOG GREW 46%

QUARTER-OVER-QUARTER TO $155 BI

AND WE CROSSED 300 MILLION PAID

SUBSCRIPTIONS, LED BY GROWTH IN

GOOGLE ONE AND YOUTUBE PREMIUM.

TODAY, I'LL DISCUSS PROGRESS IN

OUR FULL-STACK APPROACH TO AI

AND THEN SHARE HIGHLIGHTS FROM

SEARCH, CLOUD, YOUTUBE AND WAYM

AS A REMINDER, OUR FULL-STACK

APPROACH SPANS AI

INFRASTRUCTURE; WORLD-CLASS

RESEARCH, INCLUDING MODELS AND

TOOLING; AND OUR PRODUCTS AND

PLATFORMS THAT BRING AI TO

PEOPLE EVERYWHERE. FIRST UP, AI

INFRASTRUCTURE. OUR EXTENSIVE

AND RELIABLE INFRASTRUCTURE,

WHICH POWERS ALL OF GOOGLE'S

PRODUCTS, IS THE FOUNDATION OF

OUR STACK AND A KEY

DIFFERENTIATOR. WE'RE SCALING

THE MOST ADVANCED CHIPS IN OUR

DATA CENTERS, INCLUDING GPUS

FROM OUR PARTNER NVIDIA AS WELL

AS OUR OWN PURPOSE-BUILT TPUS,

AND WE'RE THE ONLY COMPANY

PROVIDING A WIDE RANGE OF BOTH.

AS WE ANNOUNCED YESTERDAY AT

NVIDIA GTC, WE ARE NOW SHIPPING

THE NEW A4X MAX INSTANCES

POWERED BY NVIDIA GB300 TO OUR

CLOUD CUSTOMERS. OUR HIGHLY

SOUGHT-AFTER TPU PORTFOLIO IS

LED BY OUR SEVENTH GENERATION

TPU, IRONWOOD, WHICH WILL BE

GENERALLY AVAILABLE SOON. WE'RE

INVESTING IN TPU CAPACITY TO

MEET THE TREMENDOUS DEMAND WE'RE

SEEING FROM CUSTOMERS AND

PARTNERS, AND WE'RE EXCITED THA

RECENTLY SHARED PLANS TO ACCESS

UP TO ONE MILLION TPUS. NEXT,

WORLD-CLASS AI RESEARCH,

INCLUDING MODELS AND TOOLING.

OUR MODELS ARE WORLD-LEADING.

GEMINI 2.5 PRO, VEO, GENIE 3,

AND OUR VIRAL SENSATION NANO

BANANA ARE AMONG THE VERY BEST

IN CLASS. OVER 230 MILLION

VIDEOS HAVE BEEN GENERATED WITH

VEO 3; AND MORE THAN 13 MILLION

HAVE BUILT WITH OUR GENERATIVE

MODELS. WE'RE LOOKING FORWARD T

THE RELEASE OF GEMINI 3 LATER

THIS YEAR. OUR RESEARCH

LEADERSHIP IS ADVANCING NEXT-FR

TECHNOLOGIES. LAST WEEK, WE

ANNOUNCED THAT OUR WILLOW

QUANTUM CHIP ACHIEVED A MAJOR

BREAKTHROUGH, RUNNING AN

ALGORITHM 13,000 TIMES FASTER

THAN ONE OF THE WORLD'S BEST

SUPERCOMPUTERS. AND THE RESULT

IS VERIFIABLE, PAVING THE WAY T

FUTURE PRACTICAL APPLICATIONS.

SPEAKING OF QUANTUM, LET ME

CONGRATULATE MICHEL DEVORET, OU

CHIEF SCIENTIST FOR QUANTUM

HARDWARE. HE RECEIVED A NOBEL I

PHYSICS FOR EARLY RESEARCH HE

DID IN THE 1980S. THREE NOBELS

AWARDED TO CURRENT GOOGLERS IN

TWO YEARS. INCREDIBLE! AND

THIRD, OUR PRODUCTS AND PLATFOR

WE'RE BRINGING AI TO MORE PEOPL

AND DEVELOPERS THAN ANYONE ELSE

IN JULY, WE ANNOUNCED THAT WE

PROCESSED 980 TRILLION MONTHLY

TOKENS ACROSS ALL OUR SURFACES.

WE ARE NOW PROCESSING OVER 1.3

QUADRILLION MONTHLY TOKENS, MOR

THAN 20X GROWTH IN A YEAR. PHEN

THIS QUARTER, WE TOOK BIG STEPS

TO REIMAGINE CHROME AS A BROWSE

POWERED BY AI THROUGH DEEP

INTEGRATIONS WITH GEMINI AND AI

MODE IN SEARCH, WITH MORE

AGENTIC CAPABILITIES COMING SOO

IN AUGUST AT MADE BY GOOGLE, WE

UNVEILED OUR PIXEL 10 SERIES OF

DEVICES. THEY'RE THE FIRST WIT

OUR MOST POWERFUL CHIP DESIGNED

TO RUN ON GEMINI, TENSOR G5.

THEY'RE OUR BEST REVIEWED

DEVICES EVER. AND LAST WEEK WE

ANDROID XR, OUR NEW OPERATING

SYSTEM, WITH SAMSUNG'S GALAXY X

DEVICE. IT BRINGS NEW WAYS TO

USE HEADSETS AND GLASSES WITH

GEMINI AT THE CORE. NOW, TURNING

TO HIGHLIGHTS FROM SEARCH. AI IS

DRIVING AN EXPANSIONARY MOMENT

FOR SEARCH. AS PEOPLE LEARN WHAT

THEY CAN DO WITH OUR NEW AI

EXPERIENCES, THEY ARE

INCREASINGLY COMING BACK TO

SEARCH MORE. SEARCH AND ITS AI

EXPERIENCES ARE BUILT TO

HIGHLIGHT THE WEB, SENDING

BILLIONS OF CLICKS TO SITES

EVERY DAY. DURING THE Q2 CALL,

WE SHARED THAT OVERALL QUERIES

COMMERCIAL QUERIES CONTINUED TO

GROW YEAR-OVER-YEAR. THIS GROWT

RATE INCREASED IN Q3, LARGELY

DRIVEN BY OUR AI INVESTMENTS IN

SEARCH, MOST NOTABLY AI

OVERVIEWS AND AI MODE. LET ME

DIVE INTO THE MOMENTUM WE ARE S

AS WE'VE SHARED BEFORE, AI

OVERVIEWS DRIVE MEANINGFUL QUER

GROWTH. THIS EFFECT WAS EVEN

STRONGER IN Q3 AS USERS CONTINU

TO LEARN THAT GOOGLE CAN ANSWER

MORE OF THEIR QUESTIONS. AND

IT'S PARTICULARLY ENCOURAGING T

SEE THE EFFECT WAS MORE

PRONOUNCED WITH YOUNGER PEOPLE.

WE ARE ALSO SEEING THAT AI MODE

IS RESONATING WELL WITH USERS.

IN THE US, WE'VE SEEN STRONG AN

CONSISTENT WEEK-OVER-WEEK GROWT

IN USAGE SINCE LAUNCH AND

QUERIES DOUBLED OVER THE QUARTE

OVER THE LAST QUARTER, WE ROLLE

OUT AI MODE GLOBALLY ACROSS 40

LANGUAGES IN RECORD TIME. IT NO

HAS OVER 75 MILLION DAILY ACTIV

AND WE SHIPPED OVER 100

IMPROVEMENTS TO THE PRODUCT IN

Q3, AN INCREDIBLY FAST PACE.

MOST IMPORTANTLY, AI MODE IS

ALREADY DRIVING INCREMENTAL

TOTAL QUERY GROWTH FOR SEARCH.

PHILIPP WILL TALK MORE ABOUT

MONETIZATION AND SHARE HOW AI I

HELPING PEOPLE CONNECT WITH

BUSINESSES AND SHOP ON SEARCH.

NEXT, GOOGLE CLOUD. OUR COMPLETE

ENTERPRISE AI PRODUCT PORTFOLIO

ACCELERATING GROWTH IN REVENUE,

OPERATING MARGINS, AND BACKLOG.

IN Q3, CUSTOMER DEMAND

STRENGTHENED IN THREE WAYS. ONE,

WE ARE SIGNING NEW CUSTOMERS

FASTER. THE NUMBER OF NEW GCP

CUSTOMERS INCREASED BY NEARLY

34% YEAR-OVER-YEAR. TWO, WE ARE

SIGNING LARGER DEALS. WE HAVE

SIGNED MORE DEALS OVER $1

BILLION THROUGH Q3 THIS YEAR

THAN WE DID IN THE PREVIOUS TWO

YEARS COMBINED. THREE, WE ARE

DEEPENING OUR RELATIONSHIPS.

OVER 70% OF EXISTING GOOGLE

CLOUD CUSTOMERS USE OUR AI

PRODUCTS, INCLUDING BANCO BV,

BEST BUY, AND FAIRPRICE GROUP.

AS WE SCALE, WE ARE DIVERSIFYIN

REVENUE. TODAY, 13 PRODUCT LINE

ARE EACH AT AN ANNUAL RUN RATE

OVER $1 BILLION, AND WE ARE

IMPROVING OPERATING MARGIN WITH

HIGHLY-DIFFERENTIATED PRODUCTS

BUILT WITH OUR OWN TECHNOLOGY.

THIS DEEP PRODUCT

DIFFERENTIATION STARTS WITH OUR

AI INFRASTRUCTURE. WE HAVE A

DECADE OF EXPERIENCE BUILDING A

ACCELERATORS AND TODAY OFFER TH

WIDEST ARRAY OF CHIPS. THIS

LEADERSHIP IS WINNING CUSTOMERS

LIKE HCA HEALTHCARE, LG AI

RESEARCH AND MACQUARIE BANK, AN

IT'S WHY NINE OF THE TOP TEN AI

LABS CHOOSE GOOGLE CLOUD. WE ARE

ALSO THE ONLY CLOUD PROVIDER

OFFERING OUR OWN LEADING

GENERATIVE AI MODELS, INCLUDING

GEMINI IMAGEN VEO CHIRP AND

LYRIA. ADOPTION IS RAPIDLY

ACCELERATING. IN Q3, REVENUE

FROM PRODUCTS BUILT ON OUR

GENERATIVE AI MODELS GREW MORE

THAN 200% PERCENT YEAR-OVER-YEA

OVER THE PAST 12 MONTHS, NEARLY

150 GOOGLE CLOUD CUSTOMERS EACH

PROCESSED APPROXIMATELY ONE

TRILLION TOKENS WITH OUR MODELS

FOR A WIDE RANGE OF

APPLICATIONS. FOR EXAMPLE, WPP

IS CREATING CAMPAIGNS WITH UP T

70% EFFICIENCY GAINS. SWAROVSKI

HAS INCREASED EMAIL OPEN RATES

BY 17% AND ACCELERATED CAMPAIGN

LOCALIZATION BY TEN TIMES.

EARLIER THIS MONTH, WE LAUNCHED

GEMINI ENTERPRISE, THE NEW FRON

DOOR FOR AI IN THE WORKPLACE,

AND WE'RE SEEING STRONG ADOPTIO

FOR AGENTS BUILT ON THIS

PLATFORM. OUR PACKAGED

ENTERPRISE AGENTS IN GEMINI

ENTERPRISE ARE OPTIMIZED FOR A

VARIETY OF DOMAINS, ARE HIGHLY

DIFFERENTIATED, AND OFFER

SIGNIFICANT OUT-OF-BOX VALUE TO

CUSTOMERS. WE HAVE ALREADY

CROSSED TWO MILLION SUBSCRIBERS

ACROSS 700 COMPANIES. NEXT,

YOUTUBE. IN THE LIVING ROOM,

YOUTUBE HAS REMAINED NUMBER ONE

IN STREAMING WATCH TIME IN THE

U.S. FOR ME THAN TWO YEARS,

ACCORDING TO NIELSEN. LAST MONTH

MARKED YOUTUBE'S FIRST TIME AS A

LIVE NFL BROADCASTER. THIS EXCL

GLOBAL BROADCAST, LIVE FROM

BRAZIL, DREW MORE THAN 19

MILLION FANS AND SET A NEW

RECORD FOR MOST CONCURRENT

VIEWERS OF A LIVE STREAM ON YOU

YOUTUBE SHORTS ALSO CONTINUES T

PERFORM WELL. IN THE US, SHORTS

NOW EARN MORE REVENUE PER WATCH

HOUR THAN TRADITIONAL IN-STREAM

ON YOUTUBE. AT OUR MADE ON

YOUTUBE EVENT, WE ROLLED OUT A

NUMBER OF AI-POWERED FEATURES

THAT ARE HELPING CREATORS SUPER

CREATION AND BUILD THEIR BUSINE

AI IS NOW STREAMLINING THE

ENTIRE CONTENT CREATION

WORKFLOW, FROM GENERATIVE VIDEO

TOOLAND MORE EFFICIENT

EDITING, TO AI-POWERED INSIGHTS

THAT HELP CREATORS OPTIMIZE

THEIR CHANNELS. WE'RE SO USING

AI TO EXPAND MONETIZATION,

AUTOMATICALLY IDENTIFYING

PRODUCTS TO MAKE THEIR VIDEOS

MORE SHOPPABLE. PHILIPP WILL

DISCUSS IN MORE DETAIL. AND

FINALLY, WAYMO. NEXT YEAR, WAYMO

AIMS TO OPEN SERVICE IN LONDON,

AND THEY'RE WORKING TO BRING

SERVICE TOKYO. THEY HAVE ALSO

ANNOUNCED EXPANSIONS TO DALLAS,

NASHVIE, DENVER AND SEATTLE,

AND SECURED PERMISSION TO

OPERATE FULLY AUTONOMOUSLY AT

SAN JOSEND SAN FRANCISCO

AIRPORTS. AUTONOMOUS TESTING

CONTINUES TO SCALE IN NEW YORK

THE NEW WAYMO FOR BUSINESS

ALLOWS ENTERPRISES TO OFFER

WAYMO AS A WORK TRAVELPTION.

AND WE LAUNCHED WAYMO TEENS

ACCOUNTS IN PHOENIX THIS SUMMER

WE'RE PLEASETO SEE USAGE

STEADILY INCREASE, WITH POSITIV

FEEDBACK FROM TEENS AND THEIR

PARENTS ALIKE. WAYMO'S GROWTH

AND MOMENTUM ARE STRONG, AND

26 IS SHAPING UP TO BE AN

EXCITING YEAR. OVERALL, A

MILESTONE QUARTER. THE

INCREDIBLE WORK OF OUR TEAMS IS

DRIVING MOMENTUM ACROSS THE

BOARD, AND OUR LEARSHIP IN AI

POSITIONS US SO WELL FOR THE

OPPORTUNITY AHEAD. I WANT TO

THANK ALL OF OUR PARTNERS AND

OUEMPLOYEES FOR THEIR HARD

WORK AND AN EXCELLENT Q3. WITH

THAT, I'LL TURN IT OVER TO PHIL.

>> Philipp Schindler: THANKS,

SUNDAR, AND HELLO, EVERYONE.

I'LL QUICKLY COVER PERFORMANCE

FOR GOOGLE SERVICES FOR THE

QUARTER, THEN STRUCTURE THE RES

OF MY REMARKS AROUNDHE GREAT

PROGRESS WARE DELIVERING

ROSS SEARCH, ADS, YOUTUBE AND P

GOOGLE SERVICES REVENUES WERE

$87 BILLION FOR THE QUARTER, UP

14% YE-ON-YEAR, DRIVEN B

ACCELERATED GROWTH IN SEARCH AN

YOUTUBE, PARTIALLY OFFSET BY A

YEAR-ON-YEAR DECLINE IN NETWORK

ADDING SOME FURTHER COLOR TO OU

THE 15% INCREASE IN SEARCH AND

OTHER WAS LED BY GROWTH ACROSS

ALL MAJOR VERTICALS, WITH THE

LARGEST CONTRIBUTIONS FROM

RETAIL AND FINANCIAL SERVICES.

YOUTUBE SAW SIMILAR PERFORMANCE

ACROSS VERTICALS. ITS 15% GROWT

IN ADVERTISING REVENUES WAS

DRIVEN BY DIRECT RESPONSE,

FOLLOWED BY BRAND. STARTING WITH

SEARCH AND OTHER REVENUES WHICH

DELIVERED OVER $56 BILLION IN

REVENUE FOR THE QUARTER. AS

SUNDAR MENTIONED, AI IS DRIVING

AN EXPANSIONARY MOMENT AND

TRANSFORMING HOW PEOPLE USE

GOOGLE SEARCH. OUR INVESTMENTS

IN NEW AI EXPERIENCES, SUCH AS

AI OVERVIEWS AND AI MODE,

CONTINUE TO DRIVE GROWTH IN

OVERALL QUERIES, INCLUDING

COMMERCIAL QUERIES, CREATING

MORE OPPORTUNITIES FOR MONETIZA

THESE AI EXPERIENCES ARE

ENHANCING HOW PEOPLE CONNECT

WITH BUSINESSES AND SHOP ON

SEARCH. WE RECENTLY ADDED

SHOPPING CAPABILITIES IN AI

MODE, WHICH NOW HELP PEOPLE SHO

CONVERSATIONALLY IN SEARCH, AND

WE EXPANDED TRY-ON CAPABILITIES

TO MORE CLOTHING ITEMS, NOW

AVAILABLE TO ANYONE IN THE U.S.

LASTLY, WE'RE MAKING IT EASIER

FOR CONSUMERS TO BENEFIT FROM

DEALS THROUGH NEW LOYALTY

OFFERINGS LIKE PERSONALIZED

ANNOTATIONS ON ORGANIC RESULTS

AND ADS. LOOKING AT MONETIZATIO

BUSINESSES CAN NOW TAP INTO OUR

MOST POWERFUL AI SEARCH

EXPERIENCES. USING OUR MOST

ADVANCED AI MODELS, WE CAN

UNDERSTAND AND PREDICT INTENT

LIKE NEVER BEFORE, UNLOCKING

ENTIRELY NEW COMMERCIAL PATHWAY

TO PROVIDE VALUABLE NEW CONSUME

CONNECTIONS AND HELPING US

MONETIZE EVEN MORE EFFICIENTLY.

ROLLED OUT GLOBALLY IN

SEPTEMBER, AI MAX IN SEARCH IS

ALREADY USED BY HUNDREDS OF

THOUSANDS OF ADVERTISERS,

CURRENTLY MAKING IT THE

FASTEST-GROWING AI-POWERED

SEARCH ADS PRODUCT. IN Q3 ALONE

AI MAX UNLOCKED BILLIONS OF NET

NEW QUERIES. BY DELIVERING THE

MOST RELEVANT AD ACROSS SURFACE

AND MATCHING ADVERTISERS AGAINS

ADDITIONAL QUERIES THEY WEREN'T

REACHING BEFORE, AI MAX HELPS

ADVERTISERS DISCOVER NEW

CUSTOMERS AT THE EXACT MOMENT

THEY NEED THEIR PRODUCT OR SERV

KAYAK, FOR EXAMPLE, LOOKED TO

GROW CONVERSIONS WHILE STAYING

WITHIN THEIR ROAS GOALS. AFTER

TURNING ON AI MAX IN SEARCH,

THEY GREW THE CONVERSION VALUE

BY 12% IN EARLY TESTS. WE

CONTINUE TO INFUSE GENERATIVE AI

CAPABILITIES AT EVERY STEP OF

THE MARKETING PROCESS. WE ROLLE

OUT IMAGEN4 IN ASSET STUDIO AND

PRODUCT STUDIO, HELPING

BUSINESSES PRODUCE MORE AND

BETTER CREATIVES. ON THE

MEASUREMENT FRONT, WE ENRICHED

THE MODEL SUPPORTING MERIDIAN,

OUR MARKETING MIX MODEL, WITH

ADDITIONAL VARIABLES. AND MORE

GRANULAR REPORTING IN PMAX IS

MAKING BIDDING MORE EFFECTIVE.

FINANCIAL SERVICES COMPANY SOFI

HAS BEEN USING PMAX TO MEET ITS

AMBITIOUS GROWTH TARGETS AND

HELPED DRIVE A 39% IMPROVEMENT

IN ITS CONVERSION VOLUME YEAR-O

MOVING TO YOUTUBE, WHERE WE SAW

ACCELERATED REVENUE GROWTH. OUR

RECOMMENDATION SYSTEMS ARE

DRIVING ROBUST WATCH TIME GROWT

IN OUR KEY MONETIZATION AREAS

LIKE SHORTS AND LIVING ROOM. AS

WE LEVERAGE GEMINI MODELS, WE

ARE SEEING FURTHER DISCOVERY IM

ON DIRECT RESPONSE, WE'RE

EXCITED ABOUT THE GROWTH IN

REVENUE WE'RE SEEING, ESPECIALL

FROM SMALL AND MEDIUM

ADVERTISERS ADOPTING DEMAND GEN

WE ALSO IMPROVED PERFORMANCE ON

DEMAND GEN, WITH OVER 100

LAUNCHES HELPING TO INCREASE

CONVERSION VALUE BY MORE THAN

40% FOR ADVERTISERS USING

TARGET-BASED BIDDING ON YOUTUBE

THE RETAIL VERTICAL CONTINUES T

LEAD OUR GROWTH ON YOUTUBE, WIT

DEMAND GEN HELPING US FURTHER

MONETIZE SHOPPING-RELATED CATEG

LOOKING AT THE LIVING ROOM, OUR

LONG-TERM BET, MORE ADVERTISERS

ARE ADOPTING INTERACTIVE, DIREC

RESPONSE ADS, LEADING TO AN

ANNUAL REVENUE RUN RATE

EXCEEDING $1 BILLION GLOBALLY

FOR THIS FORMAT. FOR OUR

VIEWERS, WE CONTINUE TO GIVE

FANS GREATER ACCESS ACROSS

SPORTS WHILE TAPPING INTO THE

BEST OF YOUTUBE'S PRODUCT

INNOVATION AND CREATOR-LED

CONTENT. SUNDAR MENTIONED THAT

WE EXPANDED OUR NFL PARTNERSHIP

WITH OUR FIRST-EVER EXCLUSIVE,

GLOBAL BROADCAST OF AN NFL GAME

BRANDS LOVED THE OPPORTUNITY,

AND WE SOLD ALL OUR AD INVENTOR

WITHIN A COUPLE OF WEEKS.

LOOKING AT CREATORS, A

SIGNIFICANT FORCE BEHIND THE

THRIVING YOUTUBE CREATOR ECONOM

IS THE COLLABORATION BETWEEN

CREATORS AND BRANDS. TOOLS LIKE

DIRECT LINKING TO DEALS WEBSITE

IN SHORTS AND SWAPPABLE BRAND

SEGMENTS IN LONG-FORM WILL SOON

HELP CREATORS SHOW HOW THEY

DELIVER GREAT VALUE FOR BRANDS.

THANKS TO A COLLABORATION WITH

DUDE PERFECT, COMCAST'S XFINITY

DROVE AN 8% SEARCH LIFT, BEATIN

OTHER XFINITY ADS' RECALL LIFT

ON SHORTS BY 34%. AT THE SAME

TIME IT DECREASED THE COST PER

LIFTED USER BY 50% WHEN COMPARE

TO THE NEXT MOST EFFICIENT AD.

WE CONTINUE TO INVEST IN

AI-POWERED FEATURES THAT ARE

HELPING CREATORS SUPERCHARGE

CREATION AND BUILD THEIR

BUSINESSES. WITH VEO3

INTEGRATION AND SPEECH TO SONG,

CREATORS GO FROM IDEA TO

ITERATION QUICKER AND NEW

CHANNEL INSIGHTS HELP THEM

BETTER UNDERSTAND PERFORMANCE.

ENDING ON YOUTUBE WITH OUR

SUBSCRIPTIONS PRODUCTS, WE'RE

ALSO SEEING MOMENTUM WITH STRON

GROWTH IN OFFERINGS SUCH AS

YOUTUBE MUSIC & PREMIUM AND

YOUTUBE TV. WE'RE ALSO APPLYING

INTERNALLY TO HELP US SERVE

CUSTOMERS WITH INCREASED SPEED,

INTELLIGENCE, AND EFFICIENCY.

OUR SALES TEAMS USE GEMINI

ENRICHED WITH ADS KNOWLEDGE TO

STREAMLINE CUSTOMER

INTERACTIONS. THIS INCREASED

PRODUCTIVITY BY OVER 10%, LED T

HUNDREDS OF MILLIONS IN

INCREMENTAL REVENUE, AND FREES

UP SELLERS TO ENGAGE WITH MORE

CUSTOMERS AT A DEEPER, MORE

STRATEGIC LEVEL. IN OUR CUSTOME

DIVISION, GEMINI-POWERED

SOLUTIONS HAVE MANAGED OVER 40

MILLION CUSTOMER SESSIONS SO FA

THIS YEAR AND RESOLVED HUNDREDS

OF THOUSANDS OF CUSTOMER

INQUIRIES. AND WE'RE JUST

GETTING STARTED. AS ALWAYS, I'LL

WRAP WITH THE PROGRESS WE'RE

SEEING ACROSS PARTNERSHIPS WHERE

OUR CUSTOMERS TAP INTO THE

STRENGTH AND BREADTH OF GOOGLE'S

PRODUCTS TO ACCELERATE THEIR TR

REVOLUT, THE GLOBAL FINANCIAL

SERVICES COMPANY, LEVERAGES

GOOGLE CLOUD'S VERTEX AI

PLATFORM AND GEMINI MODELS TO

HELP POWER ITS ADVANCED CUSTOME

SERVICE CHATBOT, DEVELOP NEW

HYPER-PERSONALIZED FINANCIAL

PRODUCTS, AND OFFER PREDICTIVE

INSIGHTS. REVOLUT IS ALSO

INCREASING ITS PRESENCE ON

YOUTUBE, ADOPTING VEO 3 FOR

PERSONALIZED CREATIVES, MAKING

GOOGLE A KEY ADS PARTNER FOR

DELIVERING GROWTH AND LAUNCHING

NEW MARKETS. IN CLOSING, I'D

LIKE TO THANK GOOGLERS

EVERYWHERE FOR THEIR

CONTRIBUTIONS TO OUR SUCCESS

AND, AS ALWAYS, TO OUR CUSTOMER

AND PARTNERS FOR THEIR CONTINUE

AND, OF COURSE, A HUGE THANKS T

ALL OF YOU AS WE CELEBRATE 25

YEARS OF GOOGLE ADS. ANAT, OVER

TO YOU.

>> Anat Ashkenazi: THANK YOU,

PHILIPP. MY COMMENTS WILL FOCUS

ON YEAR-OVER-YEAR COMPARISONS

FOR THE THIRD QUARTER, UNLESS I

STATE OTHERWISE.

I WILL START WITH RESULTS AT THE

ALPHABET LEVEL, AND WILL THEN

COVER OUR SEGMENT RESULTS. I'LL

END WITH SOME COMMENTARY ON OUR

OUTLOOK FOR THE FOURTH QUARTER

OF 2025.

WE HAD AN OUTSTANDING QUARTER IN

Q3, CONTINUING THE STRONG

MOMENTUM WE'VE HAD THROUGHOUT

THE YEAR, DELIVERING

DOUBLE-DIGIT REVENUE GROWTH

ACROSS SEARCH AND YOUTUBE

ADVERTISING, S SUBSCRIPTIONS,

PLATFORMS, DEVICES, AND GOOGLE

CLOUD.

CONSOLIDATED REVENUE REACHED

102.3 BILLION, A 16%

YEAR-OVER-YEAR INCREASE, OR 15%

IN CONSTANT CURRENCY.

TOTAL COST OF REVENUE WAS

$41.4 BILLION, UP 13%. TECH WAS

$14.9 BILLION, UP 8%.

OTHER COSTS OF REVENUES WAS

$26.5 BILLION, UP 16% WITH THE

INCREASE PRIMARILY DRIVEN BY

CONTENT ACQUISITION COSTS,

LARGELY FOR YOUTUBE, FOLLOWED BY

DEPRECIATION IN OTHER TECHNICAL

INFRASTRUCTURE OPERATIONS

COSTS.

TOTAL OPERATING EXPENSES

INCREASED 28% TO $29.7 BILLION.

R&D EXPENSES INCREASED BY 22%,

DRIVEN BY COMPENSATION

DEPRECIATION EXPENSES, RELATED

TO OUR AI EFFORTS.

SALES AND MARKETING EXPENSES

WERE FLAT.

G AND A EXPENSES INCREASED

MEANINGFULLY, PRIMARILY DUE TO A

$3.5 BILLION CHARGE RELATED TO

THE EUROPEAN COMMISSION FINE

MENTIONED IN THE EARNINGS PRESS

RELEASE.

OPERATING INCOME INCREASED 9%

THIS QUARTER TO $31.2 BILLION.

AND OPERATING MARGIN WAS 30.5%.

EXCLUDING THE EC FINE, OPERATING

INCOME INCREASED 22%, AND

OPERATING MARGIN WAS 33.9%.

OPERATING MARGIN BENEFITED FROM

STRONG REVENUE GROWTH AND

CONTINUED EFFICIENCIES IN OUR

EXPENSE BASE, OFFSET BY THE

LEGAL CHARGE AND A SIGNIFICANT

INCREASE IN DEPRECIATION

EXPENSE.

OTHER INCOME AND EXPENSES WAS

1237B9 $8 BILLION, PRIMARILY DUE

TO UNREALIZED GAINS IN OUR

NON-EQUITABLE SECURITIES

PORTFOLIO. NET INCOME INCREASED

33% TO $35 BILLION, AND EARNINGS

PER SHARE INCREASED 35% TO

$2.87S.

WE GENERATED FREE CASH FLOW OF

$24.5 BILLION IN THE THIRD

QUARTER AND $73.6 BILLION FOR

THE TRAILING 12 MONTHS.

FREE CASH FLOW IN Q3 BENEFITED

FROM STRONG OPERATING CASH FLOW

AND RECENT TAX CHANGES REGARDING

THE TIMING OF WHEN RESEARCH AND

DEVELOPMENT COSTS ARE EXPENSED

AND ASSETS ARE DEPRECIATED. THIS

WAS PARTIALLY OFFSET BY HIGHER

CAPEX.

WE ENDED THE QUARTER WITH

$98.5 BILLION IN CASH AND

MARKETABLE SECURITIES.

TURNING TO SEGMENT RESULTS.

GOOGLE SERVICES REVENUES

INCREASED 14% TO $87.1 BILLION,

REFLECTING STRENGTH IN GG

SEARCH, YOUTUBE ADVERTISING, AND

SUBSCRIPTIONS. GOOG SEARCH AND

OTHER ADVERTISING REVENUES

INCREASED BY 15% TO 56.6

$56.06, REPRESENTING ANOTHER

ROBUST QUARTER WITH CONTINUED

GROWTH ACROSS ALL MAJOR

VERTICALS WITH THE LARGEST

CONTRIBUTIONS FROM RETAIL AND

FINANCIAL SERVICES.

YOUTUBE ADVERTISING REVENUES

INCREASED 15% TO $10.3 BILLION,

DRIVEN BY DIRECT RESPONSE

ADVERTISING, FOLLOWED BY BRAND.

NETWORK ADVERTISING REVENUES OF

$7.4 BILLION WERE DOWN 3%.

SUBSCRIPTIONS, PLATFORMS AND

DEVICES REVENUES INCREASED 21%

THIS QUARTER TO $12.9 BILLION,

DRIVEN BY VERY STRONG GROWTH IN

BOTH YOUTUBE AND GOOGLE ONE

SUBSCRIPTIONS.

GOOGLE SERVICES OPERATING INCOME

INCREASED 9% TO $33.5 BILLION.

OPERATING MARGIN DECLINED YEAR

OVER YEAR TO 38.5%, AS HEALTHY

REVENUE GROWTH AND CONTINUED

EFFICIENCIES IN OUR EXPENSE BASE

WERE OFFSET BY THE IMPACT OF THE

EC FINE, WHICH WAS FULLY

REFLECTED IN THE GOOGLE SERVICES

SEGMENT.

TURNING TO THE GOOGLE CLOUD

SEGMENT, WHICH AGAIN DELIVERED

VERY STRONG RESULTS THIS

QUARTER, AS CLOUD CONTINUED TO

BENEFIT FROM OUR ENTERPRISE AI

OPTIMIZED STACK, INCLUDING OUR

OWN CUSTOM TPUS AND OUR

INDUSTRY-LEADING AI MODELS.

CLOUD REVENUE INCREASED BY 34%

TO $15.2 BILLION IN THE THIRD

QUARTER, DRIVEN BY STRONG

PERFORMANCE IN GCP, WHICH

CONTINUED TO GROW AT A RATE THAT

WAS MUCH HIGHER THAN CLOUD'S

OVERALL REVENUE GROWTH RATE.

GCP'S GROWTH WAS DRIVEN BY

ENTERPRISE AI PRODUCTS, WHICH

ARE GENERATING BILLIONS IN

QUARTERLY REVENUE.

WE HAD STRONG GROWTH IN

ENTERPRISE AI INFRASTRUCTURE AND

ENTERPRISE AI SOLUTIONS, WHICH

BENEFITED FROM DEMAND FOR OUR

INDUSTRY-LEADING MODELS,

INCLUDING GEMINI 2.5.

CORE GCP WAS ALSO MEANINGFUL

CONTRIBUTOR TO GROWTH.

AND WE HAD DOUBLE-DIGIT GROWTH

IN WORK SPACE, WHICH WAS DRIVEN

BY AN INCREASE IN AVERAGE

REVENUES PER SEAT AND THE NUMBER

OF SEATS.

CLOUD OPERATING INCOME INCREASED

BY 85% TO $3.6 BILLION AND

OPERATING MARGIN INCREASED FROM

17.1% IN THE THIRD QUARTER LAST

YEAR TO 23.7% THIS QUARTER.

THE EXPANSION IN CLOUD OPERATING

MARGIN WAS DRIEN BY STRONG

REVENUE PERFORMANCE AND

CONTINUED EFFICIENCIES IN OUR

EXPENSE BASE, PARTIALLY OFFSET

BY HIGHER TECHNICAL

INFRASTRUCTURE USAGE COSTS,

WHICH INCLUDES DEPRECIATION

EXPENSE AND OTHER OPERATIONS

COSTS SUCH AS ENERGY.

GOOGLE CLOUD'S BACKLOG INCREASED

46% SEQUENTIALLY AND 82%

YEAR-OVER-YEAR REACHING

$155 BILLION AT THE END OF THE

THIRD QUARTER. THE INCREASE WAS

DRIVEN PRIMARILY BY STRONG

DEMAND FOR ENTERPRISE AI.

AS SUNDAR MENTIONED EARLIER,

CLOUD HAS SIGNED MORE

BILLION-DOLLAR DEALS IN THE

FIRST NINE MONTHS OF 2025 THAN

IN THE PAST TWO YEARS COMBINED.

IN OTHER BETS, REVENUES WERE

$344 MILLION, AND OPERATING LOSS

WAS $1.4 BILLION IN THE THIRD

QUARTER.

WITHIN OTHER BETS, WE CONTINUE

TO OL INDICATE MORE RESOURCES TO

BUSINESSES LIKE WAYMO, WHERE WE

SEE OPPORTUNITIES TO CREATE

SUBSTANTIAL VALUE.

WITH RESPECT TO CAPEX IN THE

THIRD QUARTER, OUR CAPEX WAS

$24 BILLION. THE VAST MAJORITY

OF OUR CAPEX WAS INVESTED IN

TECHNICAL INFRASTRUCTURE WITH

APPROXIMATELY 60% OF THAT

INVESTMENT IN SERVERS AND 40% IN

DATA CENTERS AND NETWORKING

EQUIPMENT.

IN Q3, WE RETURNED CAPITAL TO

SHAREHOLDERS THROUGH REPURCHASES

OF STOCK OF $11.5 BILLION AND

DIVIDEND PAYMENTS OF

$2.5 BILLION.

TURNING TO OUR OUTLOOK, I WOULD

LIKE TO PROVIDE SOME COMMENTARY

ON FACTORS THAT WILL IMPACT OUR

BUSINESS PERFORMANCE IN THE

FOURTH QUARTER OF 2025, AS WELL

AS AN UPDATED OUTLOOK FOR CAPEX

FOR THE YEAR.

FIRST, IN TERMS OF REVENUES,

WE'RE PLEASED WITH THE OVERALL

MOMENTUM OF OUR BUSINESS. AT THE

CURRENT SPOT RATES, WE COULD SEE

AN FX TAIL WIND TO OUR REVENUES

IN Q4. HOWEVER, THE VOLATILITY

AND EXCHANGE RATES COULD IMPACT

THE EXCHANGE RATE OF FX.

YEAR-OVER-YEAR COMPARISONS IN

ADVERTISING WILL BE NEGATIVELY

IMPACTED BY THE STRONG SPEND ON

U.S. ELECTIONS IN THE FOURTH

QUARTER OF 2024, PARTICULARLY ON

YOUTUBE.

IN CLOUD, DEMAND FOR OUR

PRODUCTS REMAINS HIGH AS

EVIDENCED BY THE ACCELERATED

REVENUE GROWTH AND THE

$49 BILLION SEQUENTIAL INCREASE

IN CLOUD BACKLOG IN Q3.

IN GCP, WE SEE STRONG DEMAND FOR

ENTERPRISE AI INFRASTRUCTURE,

INCLUDING TPUS AND GPUS,

ENTERPRISE AI SLAWTIONS, DRIVEN

BY DEMAND FOR GEMINI 2.5, AND

OUR OTHER AI MODELS, AND CORE

GCP INFRASTRUCTURE AND OTHER

SERVICES, SUCH AS CYBERSECURITY

AND DATA ANALYTICS.

AS I'VE MENTIONED ON PREVIOUS

EARNINGS CALLS, W WHILE WE

HAVE BEEN WORKING HARD TO

INCREASE CAPACITY AND HAVE

IMPROVED THE PACE OF DATA CENTER

CONSTRUCTION, WE STILL EXPECT TO

REMAIN IN A TIGHT DEMAND/SUPPLY

ENVIRONMENT IN Q4 AND IN 2026.

MOVING TO INVESTMENTS. WE'RE

CONTINUING TO INVEST

AGGRESSIVELY DUE TO THE DEMAND

WE'RE EXPERIENCING FROM CLOUD

CUSTOMERS AS WELL AS THE GROWTH

OPPORTUNITIES WE SEE ACROSS THE

COMPANY.

WE NOW EXPECT CAPEX TO BE IN THE

RANGE OF $91 TO $93 BILLION IN

2025, UP FROM OUR PREVIOUS

ESTIMATE OF $85 BILLION, KEEPING

IN MIND THAT THE TIMING OF CASH

PAYMENTS CAN CAUSE VAWCIALT IN

VARIABILITY IN THE REPORTED

CAPEX NUMBER.

LOOKING OUT TO 2026, WE EXPECT A

SIGNIFICANT INCREASE IN CAPEX

AND WILL PROVIDE MORE DETAIL ON

OUR FOURTH QUARTER EARNINGS

CALL.

IN TERMS OF EXPENSES, FIRST, AS

I'VE MENTIONED ON PREVIOUS

EARNINGS CALLS, THE SIGNIFICANT

INCREASE IN OUR INVESTMENTS IN

TECHNICAL INFRASTRUCTURE WILL

CONTINUE TO PUT PRESSURE ON THE

P&L IN THE FORM OF HIGHER

DEPRECIATION EXPENSES AND

RELATED DATA CENTER OPERATIONS

COSTS, SUCH AS ENERGY.

IN THE THIRD QUARTER,

DEPRECIATION INCREASED

$1.6 BILLION Y

YEAR-OVER-YEAR TO $5.6 BILLION,

REFLECTING A GROWTH RATE OF 41%.

GIVEN THE OVERALL INCREASE IN

CAPEX INVESTMENTS, WE EXPECT THE

GROWTH RATE IN DEPRECIATION TO

ACCELERATE SLIGHTLY IN Q4.

SECOND, WE EXPECT SALES AND

MARKETING EXPENSES TO BE A MORE

HEAVILY WEIGHTED TO THE END OF

THE YEAR, IN PART TO SUPPORT

PRODUCT LAUNCHES AND THE HOLIDAY

SEASON.

Q3 WAS A STRONG QUARTER, AND

WE'RE EXCITED WITH THE ADOPTION

OF OUR AI PRODUCTS, HELPED BY A

RAPID PACE OF INNOVATION AND

GREAT EXECUTION BY OUR TEAMS.

THIS TRANSLATED INTO STRONG

MOMENTUM IN SEARCH, YOUTUBE ADS,

SUBSCRIPTION, PLATFORMS AND

DEVICES, AND CLOUD, RESULTING IN

OUR FIRST $100 BILLION-PLUS

QUARTER.

NOW, SUNDAR, PHILIPP, AND I WILL

NOW TAKE YOUR QUESTIONS.

>> Operator: THANK YOU. AS A

REMINDER, YOU WILL NEED TO PRESS

*1 ON YOUR TELEPHONE. TO PREVENT

ANY BACKGROUND NOISE, WE ASK

THAT YOU PLEASE MUTE YOUR LINE

ONCE YOUR QUESTION HAS BEEN

STATED. YOUR FIRST QUESTION

COMES FROM BRIAN NOWAK. YOUR

LINE IS NOW OPEN.

GREAT, THANKINGS FOR TAKING MY

QUESTIONS. THE FIRST IS FROM

PHILIPP OR SUNDAR ON AGENTIC

E-COMMERCE. THERE'S A LOT OF

EXTERNAL WALL STREET DISCUSSION

ABOUT AGENTIC E-COMMERCE

MONETIZING AT A LOWER RATE THAN

S&P.

SEARCH.

THE QUESTION IS, WHAT FACTORS

ARE YOU MOST FOCUSED ON TO

ENSURE A SMOOTH TRANSITION FOR

YOUR SEARCH BUSINESS AND FOR

YOUR ADVERTISERS AS YOU MOVE

OVER TO A MORE AGENTIC WORLD?

AND THE SECOND ONE, SUNDAR, IS

ON WAYMO. HOW FAR ARE WE FROM AN

INTEGRATION OF WAYMO INTO MORE

OF THE CORE GEMINI CAPABILITIES

AND THE USERS ON THE PLATFORM

TAKING YOUR USER DATA, WHERE I'M

GOING, WHAT HOTEL I'M STAYING

AT, WHAT AIRPORT I'M STAYING AT,

INTEGRATE THAT INTO WAYMO, SO

YOU CAN ACTUALLY HAVE USERS USE

THEIR PROFILES TO RESCHEDULE

WAYMOS. HOW FAR OFF IS THAT?

WHAT DO WE HAVE TO DO?

>> Philipp Schindler: HELLO,

BRIAN. GREAT QUESTION. THIS IS

ALL EARLY, BUT WE SEE AGENTIC

EXPERIENCES REALLY AS ADDITIVE

TO THE WAY PEOPLE SEEK

INFORMATION. IT HELPS US ANSWER

PEOPLE'S TOUGH QUESTIONS. IT

HELPS US -- IT HELPS PEOPLE GET

STUFF DONE AND HELPS BUSINESSES

IN THE PROCESS AND WE'RE WORKING

ON MULTIPLE AGENTIC EXPERIENCES

ACROSS KEY VERTICALS, SUCH AS

TRAVEL COMMERCE SHOPPING AND

SO ON.

AND WE'RE PAYING A LOT OF

ATTENTION TO CREATING A SEAMLESS

USER EXPERIENCE, BUT ALSO TO THE

FACT THAT WE NEED TO INTEGRATE

DIFFERENT PARTNER ECOSYSTEMS IN

A WAY THAT IT CREATES VALUE FOR

THEM.

BY THE WAY, WE'RE ALSO WORKING

CLOSE LU WITH A LOT OF OUR

PARTNERS ON THE OTHER SIDE

THROUGH OUR CLOUD SERVICES TO

IMPROVE THEIR OWN AGENTIC

EXPERIENCES.

SO MAYBE WE GO A LITTLE DEEPER

ON THE SHOPPING SIDE WHERE WE

ACTUALLY USE AI ALREADY VERY

ACTIVELY TO IMPROVE THE SHOPPING

EXPERIENCE.

AS YOU KNOW, A MORE VUCIAL

EXPERIENCE ON AI MODE. THAT

GIVES PEOPLE A MUCH MORE

INTUITIVE, CONVERSATIONAL WAY TO

SHOP. YOU CAN SIMPLY DESCRIBE

WHAT YOU'RE LOOKING FOR NOW,

LIKE THE WAY YOU TALK TO A

FRIEND AND IT WILL SHOW YOU THE

VISUAL SHOPPING RESULTS.

AND THEN WE THINK ABOUT BUILDING

AN AGENTIC SHOPPING FUTURE, AND

IT HAS TO BE ONE, AGAIN, THAT

BENEFITS BOTH USERS AND

MERCHANTS HERE. YOU KNOW THAT AI

MODE ALSO INTRODUCED NEW AGENTIC

CHECKOUT, WHICH WILL LET

SHOPPERS USE AGENTIC AI TO BUY

PRODUCTS ON MERCHANT SITES AND

SO ON. WE HAVE A PARTNERSHIP

WITH PAY PAYPAL. WE HAVE A

NEW OPEN PROTOCOLS FOR

AGENT-TO-AGENT TRANSACTIONS AND

SO ON AND SO ON.

>> Sundar Pichai: AND, BRIAN, ON

WAYMO, GREAT QUESTION. I WAS

REFLECTING I THINK ON THE EXACT

SAME TOPIC. I'M SCHEDULED TO

MEET WITH THE TEAM TO DO A

REVIEW ON IT IN A FEW WEEKS

OUT.

IT IS AN EXCITING TIME. WAYMO

CLEARLY IS SCALING UP,

PARTICULARLY IN 2026, AND I

THINK THE POSSIBILITY, AS YOU

SAID, OF GEMINI, PARTICULARLY

THE MULTIMODAL EXPERIENCE, AS

WELL AS SERVICES LIKE YOUTUBE, I

THINK THERE'S A REAL OPPORTUNITY

TO MAKE THE IN-CAR EXPERIENCE

DRAMATICALLY BETTER. DEFINITELY

SOMETHING WE ARE EXCITED ABOUT,

AND YOU'LL SEE NEWER EXPERIENCES

IN 2026 FOR SURE.

GREAT, THANK YOU BOTH.

>> Operator: OUR NEXT QUESTION

COMES FROM DOUG ANMUTH WITH JP

MORGAN. YOUR LINE IS NOW OPEN.

>> Doug Anmuth: THANKS FOR

TAKING THE QUESTIONS.

PHILIPP, MAYBE YOU CAN JUST TALK

MORE ABOUT SOME OF THE DRIVERS

OF THE CORE SEARCH STRENGTH.

IN PARTICULAR, WHEN YOU THINK

ABOUT AI OVERVIEWS AND AI MODE,

WE KNOW THAT QUERY GROWTH IS

ACCELERATING, BUT CAN YOU ALSO

HELP US UNDERSTAND FROM THERE

WHAT HAPPENS IN TERMS OF CLICKS

PER QUERY AND CONVERSION RATES

AND PRICING IN THESE AI-DRIVEN

SEARCH FORMATS?

AND THEN, ANAT, CAN YOU TALK

ABOUT WHERE YOU SEE

OPPORTUNITIES IN THE CORE COST

SPACE AS YOU LOOK TO MAKING ROOM

TO ABSORB THE RAPID GROWTH IN

INFRASTRUCTURE AND DEPRECIATION

GOING FORWARD? THANKS. FLINCHTS

>> Philipp Schindler: SO, LET ME

GIVE YOU A LITTLE BIT OF COLOR

FIRST. DELIVERED GROWTH ACROSS

ALL MAJOR VERTICALS, AS WE SAID.

IT WAS FROM RETAIL AND FINANCIAL

SERVICES, AND HEALTHCARE WAS

ALSO THE KRUBTER TO THE GROWTH

HERE, AND OUR NEW AI

EXPERIENCES. YOU MENTIONED THEM,

AI OVERVIEWS, AI MODE, CONTINUE

TO DRIVE GROWTH IN OVERALL

QUERIES, INCLUDING COMMERCIAL

QUERIES, REALLY CREATING MORE

OPPORTUNITIES FOR MONETIZATION.

AI OVERVIEWS ARE SCALING UP AND

WORKING FOR OUR ENTIRE USER

BASE. WE'RE NOW SCALED TO OVER

TWO BILLION USERS HERE, AND

WE'RE CONTINUING TO EXPAND ADS

IN AI OVERVIEWS IN ENGLISH TO

MORE COUNTRIES ACROSS DESKTOP,

MOBILE, AND SO ON.

AND AS I'VE SAID SHARED BEFORE

FOR AI OVERVIEWS, EVEN AT OUR

CURRENT BASELINE OF ADS, BELOW

AND WITHIN THE RESPONSE, WE SEE

THE MONETIZATION AT

APPROXIMATELY THE SAME RATE.

SO OVER TIME, WE'RE EXCITED

ABOUT THE OPPORTUNITY OVER

RICHER EXPERIENCES IN AI MODE

AND AI OVERVIEWS, TO BASICALLY

OPEN UP THE OPPORTUNITY FOR ALSO

MUCH RICHER PLACEMENTS.

I THINK AS I'VE SAID ON A PRIOR

CALL, WE MANAGED THE BUSINESS TO

DRIVE GREAT OUTCOMES FOR OUR

USERS AND ATTRACTIVE ROYE FOR

OUR USERS. AS YOU WILL SEE IN

THE 10-Q, PAID CLICKS WERE UP

10% YEAR-OVER-YEAR AND CP Cs

WERE UP 7% YEAR-OVER-YEAR.

>> Anat Ashkenazi: DOUG, TO YOUR

QUESTION AROUND WHERE ELSE CAN

WE SEE MORE OPPORTUNITY FOR

EFFICIENCY AND PRODUCTIVITY, I

THINK YOU HEARD ME SAY BEFORE,

THIS IS NOT A ONE-TIME TYPE OF

EFFORT, BUT RATHER AN ONGOING

WAY IN WHICH WE MANAGE THE

BUSINESS. AND THE KEY HERE IS

THAT THE MORE WE DRIVE

PRODUCTIVITY ACROSS OUR

BUSINESS, THE MORE WE CAN INVEST

IN THE BUSINESS FOR GROWTH, AND

OBVIOUSLY CONTINUE TO DRIVE

IMPROVEMENT IN THE P&L. SOME OF

THE AREAS ARE THINGS THAT YOU'VE

HEARD US TALK ABOUT IN THE PAST,

WHICH IS MODERATING THE PACE OF

HEADCOUNT GROWTH, OPTIMIZING

REAL ESTATE FOOTPRINT, BUT ALSO

AS WE INVEST MORE AND MORE IN

OUR TECHNICAL INFRASTRUCTURE,

ENSURING THAT WE ARE OPTIMIZING

THAT BUILD-OUT AND THE OVERALL

TECHNICAL INFRASTRUCTURE WE

HAVE, YOU KNOW THAT A LOT OF THE

DATA CENTERS, FOR EXAMPLE, THAT

WE BUILD OURSELVES, SO THEY'RE

OPTIMIZED AND WE MAKE SURE WE DO

THEM IN THE MOST EFFICIENT WAY.

SUNDAR MENTIONED ON ONE OF THE

PREVIOUS CALLS THE PRODUCTIVITY

ASSOCIATED WITH LEVERAGING AI

FOR GOOGLE, SO THE EXAMPLE --

THE PERCENT OF CODE NOW NEARLY

HALF OF ALL CODE GENERATED BY

AI, THAT'S THE WAY FOR US TO

LEVERAGE AI TO DRIVE FURTHER

PRODUCTIVITY ACROSS THE

BUSINESS.

AND OBVIOUSLY, WE ALWAYS LOOK AT

MAKING SURE THAT WHEN WE PROVIDE

SERVICES OR PRODUCTS THAT WE GET

THE RIGHT ECONOMICS AND THE

RIGHT VALUE FOR WHAT WE PROVIDE,

SO ONE GOOD EXAMPLE IS SHORTS,

WHICH HAS A LOWER REVENUE SHARE

THAN IN-STREAM. IT HELPS TO

IMPROVE SOME OF OUR GROSS

MARGINS.

SO, THIS IS AN EFFORT WE HAVE

ONGOING. I'VE MENTIONED IN THE

PAST WE HAVE HEADWIND WITH

DEPRECIATION OBVIOUSLY

INCREASING ALONGSIDE OUR CAPEX

INCREASE. SO WE HAVE EFFORTS

ACROSS THE ORGANIZATION TO

ENSURE WE RUN THE BUSINESS IN

THE MOST DISCIPLINED AND

PRODUCTIVE WAY, WHILE CONTINUING

TO INVEST FOR FUTURE GROWTH.

>> Doug Anmuth: THANK YOU BOTH.

>> Operator: OUR NEXT QUESTION

COMES FROM ERIC SHERIDAN WITH

GOLDMAN SACHS. YOUR LINE IS NOW

OPEN.

>> Eric Sheridan: THANK YOU SO

MUCH FOR TAKING THE QUESTIONS.

MAYBE TWO, IF I COULD.

SUNDAR, WHEN YOU THINK ABOUT

YOUR CUSTOM SILICON EFFORTS

ACROSS THE ORGANIZATION, CAN YOU

REFLECT A LITTLE BIT ABOUT THE

OPPORTUNITY SET YOU SEE WITH

EACH PASSING GENERATION OF

CUSTOM SILICON, BOTH IN TERMS OF

DRIVING OPERATING EFFICIENCIES

INSIDE THE ORGANIZATION AND

POTENTIALLY INCREASED

MONETIZATION EFFORTS AROUND

THOSE OUTSIDE OF THE

ORGANIZATION?

SECOND QUESTION WOULD BE FOR

PHILIPP. OBVIOUSLY, WE CAN SEE

THE YOUTUBE ADVERTISING REVENUE

NUMBER IN THE REPORTED RESULTS.

CAN YOU REFLECT A LITTLE BIT

ABOUT THE SCALING OF THE

SUBSCRIPTION SIDE OF YOUTUBE

OFFERINGS AND HOW THE TWO PARTS

TOGETHER PRESENT AN INTERESTING

FRAMEWORK IN THINKING ABOUT THE

MONETIZATION SIDE OF YOUTUBE

INCREASINGLY BEING A MIX OF BOTH

ADS AND SUBRIPTIONS? THANK

YOU.

>> Sundar Pichai: ERIC, OVERALL,

I WOULD SAY WE ARE SEEING

SUBSTANTIAL DEMAND FOR OUR AI

INFRASTRUCTURE PRODUCTS,

INCLUDING TPU-BASED AND

GPU-BASED SOLUTIONS. IT IS ONE

OF THE KEY DRIVERS OF OUR GROWTH

OVER THE PAST YEAR, AND I THINK

ON A GOING-FORWARD BASIS, I

THINK WE CONTINUE TO SEE VERY

STRONG DEMAND, AND WE ARE

INVESTING TO MEET THAT.

I DO THINK A BIG PART OF WHAT

DIFFERENTIATES GOOGLE CLOUD ,

EFFECTIVELY, WE HAVE TAKEN A

DEEP FULL-STACK APPROACH TO AI,

SO WE ARE -- AND THAT REALLY

PLAYS OUT. WE ARE THE ONLY

HYPERSCALER WHO IS REALLY

BUILDING OFFERINGS ON OUR OWN

MODELS.

AND WE ARE ALSO HIGHLY

DIFFERENTIATED ON OUR OWN

TECHNOLOGY. SO TO YOUR QUESTION,

I THINK THAT DOES GIVE US THE

OPPORTUNITY TO CONTINUE DRIVING

GROWTH IN OPERATING MARGINS AND

CLOUD, AS WE HAVE DONE IN THE

PAST.

AND ALSO, I THINKROM A REVENUE

SET, THE INFRASTRUCTURE PORTION

OF OUR BUSINESS TO BE A GROWTH

DRIVER LOOKING AHEAD AS WELL.

FLINCH

>> Philipp Schindler: AND TO THE

SECOND PART OF YOUR QUESTION,

TAKING A QUICK STEP BACK, WE

OFTEN DESCRIBE YOUTUBE'S

BUSINESS AS A FLYWHEEL. IT ALL

STARTS WITH THE CREATORS, AND WE

HAVE SIGNIFICANTLY INVESTED HERE

TO BE THE PLACE THAT YOUTUBE

CREATORS REALLY CALL THEIR HOME.

THAT'S A BIG PIECE OF IT, THE

NUMBER ONE PIECE.

VIEWERS, OF COURSE, YOUTUBE HAS

BILLIONS OF MONTHLY LOGGED IN

USERS AND EVERY DAY, PEOPLE

WATCH BILLIONS OF HOURS OF

VIDEO, AND WE TALKED ABOUT HOW

OUR RECOMMENDATION SYSTEMS A

DRIVING ROBUST WATCH TIME

GROWTH, AND SO ON AND SO ON.

ON THE MONETIZATION SIDE,

YOUTUBE'S BUSINESS IS REALLY

POWERED BY -- LET'S CALL IT A

TWIN ENGINE MONETIZATION

STRATEGY, COMBINING ITS

ADVERTISING BUSINESS AND ITS

GROWING SUBSCRIPTION SERVICES.

BOTH YOUTUBE ADS AND

SUBSCRIPTIONS SAW A STRONG

GROWTH THIS QUARTER, AND SO

LOOKING AT YOUTUBE MUSIC &

PREMIUM, USERS ARE ON AVERAGE

DELIVERING MORE VALUE TO

CREATORS, TO MUSIC, MEDIA

PARTNERS, AND YOUTUBE ITSELF

THAN EVEN AD-SUPPORTED USERS

DO.

SO, IN OTHER WORDS, ON AVERAGE,

A YOUTUBE MUSIC & PREMIUM

SUBSCRIBER -- TN THEY WERE

-SUPPORTED USERS. AND FANS

COME FROM ALL OVER THEORLD.

TH SEND THI ENGAGEMEN

THUGH ADS A SUBSCRIPTION,

GENERATES YOUBE'S REVENUES,

AND FUNDS IS WHAT STARTED

WITH, THESE CREATORS HERE, AND

THIS DRIVES MORE VIEWERSHIP AND

SO ON. AND THAS THE FLYWHEEL.

SO OUR PRIORITY CONTINUESHI

GROWTH CYCLE. WE'RE HAPPY WITH

TN

STRATEGY.

>> Operar: OUR NEXT QUESTION

COMES FROMA SHMULIK WITH

BERNSTEIN. YOUR LINE INOW

OPEN.

>> Mark Shmulik: YES. THANKS FOR

TAKING THE QUESTIONS.

SUNDAR, WH THE OPTIO OF

ACROSSHE USER BASE, ARE THERE

ANY MNIFU DFENC T

CAUT BEHIN THEA

DEPTH OF ENGEMENT FOR THOSE

USERE

ECOSTEM?

AND, PHILIPP, I KNOW WE ASK THIS

MOST QUARTER BUT I'M CURIOUS

WITH SOME OF THE ADOPTION YOU'VE

SEEN AROUND AI OVERVIEWS AND

MODE, HOW YOU SEE THE ECONOMICS

OF SEARCH EVOLVING WITH THE

HIGHER COMMERCIAL AND TOTAL

QUERY VOLUME AND HOW IT KIND OF

COMPARES AGAINST THE INCREMENTAL

COST TO DELIVER THESE RESULTS.

THANK YOU.

>> Sundar Pichai: MARK, LOOK, I

THINK OBVIOUSLY, AI OVERVAWS ARE

AI VIEWS ARE A NATURAL PART OF

THE GOOGLE EXPERIENCE, AND SO

ENGAGEMENT IS VERY HIGH. I WOULD

SAY AI MODE, YOU HAVE VARIED

COHORTS, PEOPLE WHO ARE CASUAL

USERS WHO ARE CHECKING IT OUT.

AND THEN THERE'S A CORE GROUP

WHICH REALLY LIKES AI MODE AND

IS PASSIONATE ABOUT IT, AND SO

YOU SEE THE EARLY ADOPTERS. THE

PRODUCT IS RESONATING VERY

STRONGLY AND THEY ARE SEEKING IT

OUT. SO, I THINK THAT'S HOW I

WOULD HIGHLIGHT THE DIFFERENCE.

WITH GEMINI, AGAIN, SORT OF

ENGAGED USER BASE WHO ARE

SEEKING OUT THE PRODUCT AND SO

ON.

BUT ACROSS THE BOARD, I THINK

THE TRAJECTORY HAS BEEN WE ARE

DEFINITELY SEEING IN EACH OF

THOSE USE CASES A SET OF EARLY

ADOPTERS, AND MORE PEOPLE COMING

IN, AND PEOPLE USING IT CONTINUE

TO USE IT MORE OVER TIME AND

REPORT HIGH USER SATISFACTION.

SO I WOULD SAY THE UNDERLAYING

PRODUCT METRICS NOW ARE PRETTY

ENCOURAGING TO SEE AS WELL.

>> Philipp Schindler: TO THE

SECOND PART OF YOUR QUESTION, I

THINK WE COVERED BEFORE --

SUNDAR COVERED THE QUERY

DEVELOPMENT. AND AS I'VE JUST

SAID BEFORE, FOR THE AI

OVERVAWS, EVEN AT OUR CURRENT

BASELINE OF ADS, WHETHER ABOVE,

BELOW, AND WITHIN THE AI

RESPONSE, OVERALL WE SEE THE

MONETIZATION AT APPROXIMATELY

THE SAME RATE, AND THIS IS A

GREAT BASELINE FOR FURTHER

INNOVATION.

WE TALKED ABOUT THIS, WE'RE

EXCITED ABOUT WHERE THIS CAN GO,

AND .

AND ON THE AI MODE SIDE, WE'RE

TESTING ADS IN AI MODE AND WE'LL

CONTINUE TO TEST AND LEARN

BEFORE WE EXPAND THIS ANY

FURTHER. SO THIS IN COMBINATION

WITH WHAT WE MENTIONED ABOUT THE

COMMERCIAL QUERY OVERALL

DEVELOPMENT, I THINK WE'RE IN A

GOOD PLACE HERE.

YOU COULD ALSO ARGUE THAT ON

QUERIES THAT HISTORICALLY HAVE

NOT BEEN WELL-MONETIZED, WE

THINK THERE'S A POTENTIAL

OPPORTUNITY HERE WHERE YOU CAN

OBVIOUSLY IMAGINE THAT WE CAN

BUILD THIS OUT WITH SMART AI

INTEGRATION.

>> Operator: OUR NEXT QUESTION

COMES FROM M MICHAEL NATHANSON

WITH MOFFETNATHANSON. YOUR LINE

IS NOW OPEN.

>> Michael Nathanson: THANKS. I

HAVE ONE FOR PHILIPP AND ONE FOR

ANAT.

PHILIPP, IT'S CLEAR THAT WHEN

PEOPLE USE AI MODE, THE QUERY

LENGTH IS MUCH LONGER. CAN YOU

TALK ABOUT HOW THAT LONGER LENS

MAY BE IMPACTING YOUR ABILITY TO

DRIVE AND SOME OF YOUR BENEFITS

OF MAYBE QUERIES.

ANAT, YOU CAME TO ALPHABET FROM

A PHARMACEUTICAL COMPANY. YOU'VE

BEEN THERE MORE THAN A YEAR. CAN

YOU TALK A BIT ABOUT HOW YOU'RE

WORKING TO LOOK AT ROIC

INTERNALLY AND WHAT ARE YOU

SEEING THAT GIVES YOU CONFIDENCE

THAT THE SPENDING IS DRIVING

BETTER RETURNS LONGER TERM?

THANKS.

>> Philipp Schindler: AS SUNDAR

SHARED, AI MODE HAS OVER

75 MILLION DAILY ACTIVE USERS IN

THE U.S., AND WE SEE STRONG AND

CONSISTENT WEEK-OVER-WEEK GROWTH

IN USAGE.

AND AS I ALSO MENTIONED, WE'RE

TESTING ADS IN AI MODE. WE'LL

CONTINUE TO TEST BEFORE WE

EXPAND ANY FURTHER. IT'S REALLY

TOO EARLY TO TELL AND GO INTO

ANY OF THE DETAILS OF THAT

TESTING.

>> Anat Ashkenazi: AND THE

QUESTION RELATED TO ROIC AND HOW

WE LOOK AT JUST OVERALL OUR

BUSINESS AND WHERE DO WE SEE

EARLY SIGNS THAT ARE

ENCOURAGING.

SO FIRST, I WOULD SAY IT'S NOT

JUST EARLY SIGNS BECAUSE WE'RE

SEEING RETURNS. OBVIOUSLY, IN

THE CLOUD BUSINESS YOU'VE HEARD

US TALK ABOUT THE FACT THAT WE

ALREADY ARE GENERATING BILLIONS

OF DOLLARS FROM AI IN THE

QUARTER.

BUT THEN ACROSS THE BOARD, WE

HAVE A RIGOROUS FRAMEWORK AND

APPROACH BY WHICH WE EVALUATE

THESE LONG-TERM INVESTMENTS THAT

ARE MEANT TO DO TWO THINGS. ONE

IS TO ENSURE WE HAVE -- WE BUILD

A RE RESILIENT GROWTH

PROFILE FOR THE COMPANY, BUT

ALSO THAT WE MEET THE DEMAND OF

THE CUSTOMERS THAT WE HAVE HERE

IN THE MORE NEAR AND MID-TERM.

SO WE LOOK AT IT ACROSS THE

BUSINESS. WE EVALUATE THE

POTENTIAL RETURN FOR EACH ONE OF

THEM, WHETHER IT'S IN CLOUD, AND

I THINK THAT'S MORE VISIBLE

OBVIOUSLY EXTERNALLY GIVEN THAT

YOU SEE THE REVENUE GENERATED

AND THE FACT THAT WE'RE UNABLE

TO MEET AT THIS POINT CUSTOMER

DEMAND. WE HAVE MORE DEMAND THAN

WE HAVE SUPPLIED.

IN OUR ADS BUSINESS, YOU SEE THE

FACT THAT WE'RE INVESTING TO

TRANSFORM SEARCH, AS YOU HEARD

FROM PHILIPP AND SUNDAR WITH AIO

AND AI MODE, SO WE'RE EXCITED TO

SEE WHAT OUR INVESTMENTS ARE,

HOW THE INVESTMENTS ARE HELPING

ADVERTISERS AS WELL.

YOUTUBE IS HELPING POWER

RECOMMENDATIONS. SO WHEN WE MACH

A DECISION ON INVESTMENT IN THE

LONG-TERM, WE GO THROUGH A VERY

RIGOROUS PROCESS OF ASSESSING

WHAT THE RETURN COULD BE AND

OVER WHAT TIMEFRAME WE WILL SEE

THAT RETURN TO GIVE US THE HIGH

LEVEL OF CONFIDENCE TO THEN

INVEST AND MAKE THOSE

INVESTMENTS FOR THE LONG-TERM.

SO IT'S A VERY RIGOROUS

APPROACH.

>> Michael Nathanson: THANKS.

>> Operator: OUR NEXT QUESTION

COMES FROM ROSS SANDLER WITH

BARCLAYS. YOUR LINE IS NOW

OPEN.

>> Ross Sandler: GREAT. ABOUT

20% OF GOOGLE'S SEARCH QUERIES

ARE COMMERCIAL HISTORICALLY, AND

YOU TALKED A BUNCH ON THIS CALL

ABOUT HOW AI OVERVIEWS ARE KIND

OF EXPANDING THE BREADTH OF

QUERIES. COULD YOU TALK ABOUT

HOW NEW PRODUCT ON THE

>> Philipp Schindler: SO, LOOK,

AI MAX -- AND I MENTIONED THIS

IN MY CALL BEFORE -- IMPROVES

THE ABILITY FOR ADVERTISERS TO

TARGET THE WIDER RANGE OF

QUERIES. SEPARATELY, THERE IS

THE QUESTION OF WHETHER QUERIES

ACTUALLY INCREASE WITH AI MODE,

AND SUNDAR ACTUALLY TALKED ABOUT

IT AND MENTIONED THE OPPORTUNITY

THAT HE SEES HERE. SO I THINK

IT'S IMPORTANT TO SEPARATE THOSE

TWO THINGS.

AND I PERSONALLY ALSO SEE --

THIS IS WHAT I JUST SAID IN MY

LAST REMARK -- THAT I THINK OVER

TIME THERE'S AN OPPORTUNITY TO

ACTUALLY TAKE LET'S SAY QUERIES

THAT ARE NOT FULLY COMMERCIAL

BUT COULD HAVE AN ADJACENT

COMMERCIAL RELATIONSHIP, TO

BASICALLY EXPAND THIS INTO MORE

ATTRACTIVE ADS OFFERINGS WITHOUT

CREATING REAL INTERESTING USER

EXPERIENCE AT THE SAME TIME.

>> Sundar Pichai: YEAH. AND THE

ONLY THING I WOULD ADD IS, JUST

STEPPING BACK BROADLY, I THINK

AI OVERVIEWS AND AI MODE ARE

DRAMATICALLY IMPROVING SEARCH.

WE CAN SEE IT IN USER

SATISFACTION, USER QUALITY, ALL

OUR METRICS. AND THEY'RE

UNIVERSAL IN NATURE. THEY APPLY

ACROSS THE UNIVERSALITY OF HUMAN

NEEDS. SO I THINK WE ARE SEEING

IT IN BREADTH.

AND SO NATURALLY OVER TIME,

THEY'LL APPLY TO COMMERCIAL

CATEGORIES AS WELL.

>> Operator: OUR NEXT QUESTION

COMES FROM KEN GAWRELSKI (WELLS

FARGO) WITH WELLS FARGO. YOUR

LINE IS NOW OPEN.

THANK YOU VERY MUCH. TWO

QUESTIONS PLEASE.

FIRST, IT APPEARS MORE AND MORE

CLEAR THAT ALL THE NEW MODES

WITH GOOGLE, WITH GEMINI, AI

AI OVERVIEWS, AI MODE, EVEN

CHATGPT, IS GROWING THE

ADDRESSABLE MARKET FOR

ENGAGEMENT IN SEARCH-LIKE

BEHAVIOR. COULD YOU TALK ABOUT

WHAT GIVES YOU CONFIDENCE THAT

IT WILL ALSO GROW THE

ADDRESSABLE MARKET FOR MARKET

ACTIVITY AND OVERALL REVENUE

ASSOCIATED WITH THAT BEHAVIOR?

THAT'S QUESTION ONE.

AND QUESTION TWO IS JUST MORE

ABOUT, AS YOU THINK ABOUT AI

MODE, AI OVERVIEWS, AND

TRADITIONAL GOOGLE SEARCH, HOW

DO YOU THINK -- DO YOU SEE A

WORLD IN 12 TO 24 MONTHS, THOSE

ALL EXIST, AND DOES THE USER --

DOES A USER EVENTUALLY PICK WHAT

MODE THEY WANT? DOES THE

ALGORITHM PICK THE MODE? CAN YOU

TALK A LITTLE BIT ABOUT HOW YOU

THINK THAT WILL PROGRESS OVER

THE NEXT 12 TO 24 MONTHS? THANK

YOU VERY MUCH.

>> Sundar Pichai: KEN, THANKS.

LOOK, I THINK IT'S A DYNAMIC

MOMENT, AND I THINK WE ARE

MEETING PEOPLE IN THE MOMENT

WITH WHAT THEY ARE TRYING TO

DO.

OBVIOUSLY, SEARCH IS EVOLVING,

AND BETWEEN AI OVERVIEWS AND AI

MODE, I THINK WE ARE ABLE TO

KIND OF GIVE THE RANGE OF

EXPERIENCE FOR PEOPLE IN THIS

MOMENT.

OVER TIME, YOU WILL EXPECT US

TO -- YOU CAN EXPECT US TO MAKE

THE EXPERIENCES SIMPLER IN A WAY

THAT, JUST LIKE WE DID UNIVERSAL

SEARCH MANY, MANY YEARS AGO, WE

MAY HAVE DONE TEXT SEARCH, VIDEO

SEARCH, IMAGE SEARCH, ET CETERA,

AND THEN WE BROUGHT IT TOGETHER

AS UNIVERSAL SEARCH.

SO YOU WILL SEE EVOLUTIONS LIKE

THAT, BUT I THINK WE WON'T BE

SENSITIVE TO MAKING SURE THAT WE

ARE MEETING THE USERS IN TERMS

OF WHAT THEY ARE LOOKING FOR.

I THINK GEMINI ALLOWS US TO

BUILD A MORE PERSONAL,

PROACTIVE, POWERFUL AI ASSISTANT

FOR THAT MOMENT, AND I THINK

HAVING THE TWO SURFACES, SEARCH

AND GEMINI, ALLOWS US TO REALLY

SERVE USERS ACROSS THE BREADTH

OF THEIR NEEDS.

BUT OVER TIME, WE WILL

THOUGHTFULLY LOOK FOR

OPPORTUNITIES TO MAKE THE

EXPERIENCE BETTER FOR USERS.

AND TO THE FIRST PART, I WOULD

BROADLY SAY, I DO THINK WE HAVE

BEEN CONSISTENTLY SAYING FOR A

WHILE NOW THIS IS AN

EXPANSIONARY MOMENT, AND WE ARE

SEEING PEOPLE ENGAGE MORE, AND I

THINK WHEN THEY DO THAT,

NATURALLY, A PORTION OF THAT

INFORMATION FOR USERS, THOSE

JOURNEYS ARE COMMERCIAL IN

NATURE. SO I WOULD EXPECT THAT

TO PLAY OUT OVER TIME AS WELL.

>> Operator: OUR LAST QUESTION

COMES FROM JUSTIN POST WITH

BAML. YOUR LINE IS NOW OPEN.

>> Justin Post: GREAT. JUST A

COUPLE.

SUNDAR, I THINK YOU MENTIONED

GEMINI 3 IS COMING. MAYBE YOU

COULD COMMENT ON THE PACE OF

INNOVATION IN FRONTIER MODELS.

IS THERE STILL JUST A TREMENDOUS

AMOUNT OF INNOVATION, OR IS IT

SLOWING AT ALL?

AND THEN YOU MENTIONED A NUMBER

OF LARGE DEALS SIGNED IN THE

LAST MONTH FOR CLOUD, WHICH IS

GREAT. ANY CHANGES IN THE

ECONOMICS OF THESE DEALS, AS FAR

AS LONG-TERM PROFITABILITY?

ANYTHING WE SHOULD BE AWARE OF?

THANK YOU.

>> Sundar Pichai: THANKS,

JUSTIN.

THE FIRST ON THE PACE OF

FRONTIER MODEL RESEARCH AND

DEVELOPMENT.

LOOK, I THINK TWO THINGS ARE

BOTH SIMULTANEOUSLY TRUE. I'M

INCREDIBLY IMPRESSED BY THE PACE

AT WHICH THE TEAMS ARE EXECUTING

AND THE PACE AT WHICH WE ARE

IMPROVING THESE MODELS.

BUT IT ALSO IS TRUE AT THE SAME

TIME THAT EACH OF THE PRIOR

MODELS YOU'RE TRYING TO GET

BETTER IS NOW GETTING MORE AND

MORE CAPABLE.

SO I THINK BOTH THE PACE IS

INCREASING, BUT SOMETIMES WE ARE

TAKING THE TIME TO PUT OUT A

NOTABLY IMPROVED MODEL. SO I

THINK THAT MAY TAKE SLIGHTLY

LONGER.

BUT I DO THINK THE UNDERLYING

PACE IS PHENOMENAL TO SEE, AND

I'M EXCITED ABOUT OUR GEMINI 3.0

RELEASE LATER THIS YEAR.

ON CLOUD, I WOULD POINT OUT AS A

SIGN OF THE MOMENTUM, I THINK A

NUMBER OF DEALS GREATER THAN

$1 BILLION THAT WE SIGNED IN THE

FIRST THREE QUARTERS OF THIS

YEAR ARE GREATER THAN THE TWO

YEARS PRIOR. SO WE ARE

DEFINITELY SEEING STRONG

MOMENTUM AND WE ARE EXECUTING AT

PACE.

AND IN TERMS OF LONG-TERM

ECONOMICS, I WOULD SAY THAT,

AGAIN, AS BEING A FULL-STACK AI

PLAYER, AND THE FACT THAT WE ARE

DEVELOPING HIGHLY DIFFERENTIATED

PRODUCTS ON OUR OWN TECHNOLOGY I

THINK WILL HELP US DRIVE A GOOD

TRAJECTORY HERE, AS YOU HAVE

SEEN OVER THE PAST FEW YEARS.

>> Justin Post: THANK YOU.

>> Operator: THANK YOU, 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.

WE LOOK FORWARD TO SPEAKING WITH

YOU AGAIN ON OUR FOURTH QUARTER

2025 CALL. THANK YOU, AND HAVE A

GOOD EVENING.

>> Operator: THANK YOU,

EVERYONE. THIS CONCLUDES TODAY'S