Alphabet Inc. (GOOGL) Narrative

Sources: Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (filed February 5, 2026, accession 0001652044-26-000018) and Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (filed July 23, 2026, accession 0001652044-26-000071). Current-quarter results detail also from the Current Report on Form 8-K furnished July 22, 2026 (accession 0001652044-26-000066).

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Business

From the FY2025 10-K, accession 0001652044-26-000018.

Alphabet is a holding company whose dominant asset is Google. It reports three segments, Google Services, Google Cloud, and Other Bets, plus Alphabet-level activities, an unallocated bucket that carries centralized AI research and frontier-model development serving all businesses.

Google Services is the profit engine. Core products and platforms include Search, YouTube, Android, Chrome, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Gemini, and devices. It makes money in two ways:

• Advertising, split for reporting into (1) Google Search & other, Google search properties plus owned-and-operated surfaces like Gmail, Maps, and Play, including traffic from search distribution partners who set Google.com as default; (2) YouTube ads; and (3) Google Network, third-party properties in AdMob, AdSense, and Google Ad Manager. Alphabet distinguishes performance advertising (click-driven, measurable direct response) from brand advertising. Advertising was more than 70% of total revenues in 2025.
• Subscriptions, platforms, and devices, YouTube TV, YouTube Music and Premium, NFL Sunday Ticket, Google One (which bundles access to the most capable Gemini models), Google Play app sales and in-app purchases, and Pixel hardware.

Monetization is tracked with paid clicks and cost-per-click (Search & other) and impressions and cost-per-impression (Network).

Google Cloud sells consumption-based fees and subscriptions across AI-optimized infrastructure (custom TPUs and third-party GPUs), the Vertex AI developer platform (200+ foundation models), cybersecurity, data and analytics, and agent products (Gemini Enterprise, Gemini for Google Workspace), plus Google Workspace subscriptions. As of the June 2026 quarter, Cloud also books product sales, principally sales of TPU systems to customers requiring on-premises infrastructure for high-scale workloads, a new revenue line.

Other Bets spans businesses at very different maturities, X (the moonshot factory) at the research end, Waymo (fully autonomous paid ride-hailing, expanding domestically and internationally) and Isomorphic Labs (AI drug discovery) further along. Revenue comes primarily from autonomous transportation and internet services. Some Other Bets have their own boards and outside investors.

Strategic frame. Alphabet describes a "full-stack" AI approach: AI-optimized infrastructure (including the seventh-generation Ironwood TPU), frontier research and models (Gemini 3), and distribution through products used by billions. All 15 of Alphabet's half-billion-user products, seven of which have two billion users, run on Gemini models. Alphabet says it invested more than $200 billion in R&D over the last five years.

Cost structure. Cost of revenues = traffic acquisition costs (TAC, paid to distribution partners and Google Network partners) + other cost of revenues (content acquisition, principally YouTube; depreciation of technical infrastructure; technical-infrastructure compensation; device and TPU-system inventory; energy, equipment, and network capacity). Operating expenses split into R&D (engineering compensation, infrastructure depreciation, energy/equipment), sales and marketing, and G&A (which absorbs legal fines and settlements).

Competition is explicitly framed as broad: general-purpose and vertical search engines, e-commerce providers, online advertising platforms and networks, offline advertising, digital content and app platforms, enterprise cloud providers, AI model developers, consumer hardware makers with proprietary platforms, digital video services, social networks, and workspace communication tools.

Workforce and control. 190,820 employees as of December 31, 2025. Class B stock carries 10 votes, Class A one vote, Class C none; Larry Page and Sergey Brin beneficially owned roughly 89.3% of Class B at year-end 2025, about 52.7% of total voting power.

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Risk factors

Condensed from the FY2025 10-K, accession 0001652044-26-000018, with material updates from the 10-Q for the quarter ended June 30, 2026, accession 0001652044-26-000071.

Advertising concentration. More than 70% of 2025 revenues came from online advertising. Advertisers, distributors, publishers, and content providers can terminate at will. AI is reshaping how ads are delivered and there is no assurance Alphabet adapts competitively to new formats. Ad-blocking technologies, privacy-practice changes (Alphabet's own and other companies'), and macroeconomic softness all bear directly on the revenue base.

The capital-intensity risk, now the central one. Alphabet is expanding property and equipment investment sharply, and warns that changes in historical asset performance, expected technology advancements, or future deployment plans could shorten the useful lives over which those assets are depreciated. It is entering significant third-party leasing arrangements for compute capacity and a number of large, long-duration commercial agreements; in a nonperformance event or an industry downturn it could incur additional liabilities, hold excess capacity it cannot easily redeploy, and fail to collect from counterparties. The 10-Q updates this to name the newer exposures explicitly: supplying TPU systems to third parties increases cost and operational complexity, and Alphabet has issued financial guarantees and backstops supporting third-party data center and power infrastructure build-out.

Supply, power, land, and water. Alphabet states plainly that its ability to scale technical infrastructure is "increasingly constrained by the availability of power, water, and land," that global energy supply is constrained by AI compute demand, and that supply of specialized AI chips is limited to a small number of qualified suppliers. Industry capacity for AI accelerators (GPUs and its own TPUs) is highly competitive; if competitors claim supply first, Alphabet faces higher costs and constraints. Securing power involves complex, long-lead-time arrangements.

Margin and growth-rate compression. Revenue growth may decelerate from changing usage, competing technologies, geographic mix, pricing, and product/policy changes. Margins face pressure from fixed-cost infrastructure that does not scale with revenue, rising regulation and competition, and mix shift toward structurally lower-margin lines (Cloud, devices, consumer subscriptions, Other Bets). Alphabet notes device margins have already weighed on consolidated margins.

AI-specific liability and reputational risk. AI-enabled products raise exposure on harmful content, inaccuracy, discrimination, IP infringement and misappropriation, rights of publicity, defamation, privacy, cybersecurity, and minor protection. Alphabet concedes it may not identify or resolve all AI-related deficiencies before they arise.

Competition in AI. Frontier model development requires large, sustained investment; deployment depends on availability and pricing of third-party equipment, network capacity, and energy. Competitors may build similar or superior technology more cheaply, or hold patents that limit Alphabet's ability to make, use, or sell its own AI products.

Antitrust and regulatory, the largest legal overhang.

• US Search (DOJ and state AGs). The District Court for D.C. ruled against Google in August 2024; a final judgment entered December 2025 imposes restrictions on how Google distributes its services and requires it to share certain search data with, and offer syndication services to, certain competitors. Google appealed in January 2026 and moved to pause implementation; the DOJ and state AGs cross-appealed in February 2026.
• US Ad tech. In April 2025 the Eastern District of Virginia found Google's publisher tools unfairly excluded rivals (while clearing its advertiser tools and the DoubleClick/AdMeld acquisitions). A remedies proceeding was held September 2025 with closing arguments in November 2025; final judgment is pending. The DOJ's remedy proposal includes structural remedies that could have a material adverse effect. A parallel Texas-led state AG case follows the remedies decision. No loss estimate is possible.
• EC ad tech. A €3.0 billion fine for self-preferencing (September 2025), appealed November 2025; a $3.5 billion charge was recognized in Q3 2025 and bank guarantees posted in lieu of cash.
• EC Android. The €4.3 billion 2018 fine, reduced to €4.1 billion in 2022; Google's final appeal was denied in July 2026.
• EC AdSense for Search. €1.5 billion fine annulled by the General Court in September 2024; the EC's appeal is pending.
• Digital Markets Act. Two EC non-compliance investigations (Google Play and Search) with preliminary findings of non-compliance issued March 2025.
• Google Play / Epic. A 2023 jury verdict and October 2024 remedies decision altered Android and Play business models; a March 2026 settlement with Epic was followed by a July 2026 joint withdrawal of the motion to modify the injunction, leaving Google complying with the 2024 remedies.
• Private and collective actions overlapping regulatory claims are pending across the US and Europe.

Privacy and data regulation. GDPR and UK GDPR, a growing patchwork of US state comprehensive-privacy, biometric, children's-data, and IoT laws, the EU Digital Markets Act (consent for cross-product data combination, mandated search-data sharing, and, per the 10-Q update, interoperable access to Android for third-party AI companies), and the EU Data Act. Cross-border data transfer mechanisms remain legally unsettled.

Broader regulation. The EU AI Act (fully applicable after a two-year transition), AI legislation in Brazil, India, Japan, South Korea, Singapore, and Vietnam, and over 1,000 US state AI bills considered in 2025 including California's Transparency in Frontier Artificial Intelligence Act and New York's Responsible AI Safety and Education Act. Content-moderation regimes (EU Digital Services Act, Florida SB 7072, Texas HB 20, UK/Singapore/Australia laws) and erosion of Section 230 / DMCA safe harbors.

Tax. OECD 15% global minimum tax adoption outside the US could raise the effective rate and cash taxes, notwithstanding the January 2026 "Side-by-Side Safe Harbor" exempting US operations of US-parented companies. A 1% US excise tax applies to share repurchases and could rise. Digital services taxes proliferate.

Investment-portfolio volatility. Gains and losses on non-marketable equity securities flow through OI&E, and Alphabet explicitly warns this "increases the volatility of our OI&E." Fair-value measurement of private holdings uses subjective, unobservable inputs; recorded remeasurement gains may differ significantly from what is ultimately realized. (This risk is no longer theoretical, see the current quarter below.)

Financing and dilution, new emphasis in the 10-Q. The 10-K flagged that difficulty accessing capital markets or managing indebtedness, including obligations under leases, backstops, and guarantees, could restrict investment and reduce flexibility. The 10-Q broadens this to equity: it adds the ATM Program and derivative securities to the financing channels, and adds "the dilutive impact of current or future equity issuances" as something that could harm financial condition and depress the stock price. A new standalone risk factor states that ATM sales, conversion of the mandatory convertible preferred stock, or share-settled preferred dividends could dilute existing holders and depress the market price of Class A and Class C stock, including through hedging and arbitrage activity around the preferred, with no assurance any depression would be short-term. It also notes that if Alphabet is repurchasing shares at the time of an equity offering it may be required to suspend repurchases.

Other named risks. Manufacturing and supply-chain concentration (single- or limited-source components, contract manufacturers, tariffs, sanctions, export controls); IT and communications systems failure, including state-sponsored attacks and data centers in earthquake zones; problematic content, web spam, and content farms degrading search quality; data privacy and security incidents; dependence on unimpeded internet access; international operations (approximately 52% of 2025 revenues were international) and FX; IP protection, including the risk that "Google" becomes generic; brand damage; execution risk on acquisitions, joint ventures, investments, and divestitures; operating-result volatility; and key-person dependence on Sundar Pichai.

Ownership structure. Dual-class concentration limits other stockholders' ability to influence corporate matters, and non-voting Class C issuance (including for acquisitions and employee equity) preserves that concentration.

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Management's discussion and analysis, fiscal year 2025

From the FY2025 10-K, accession 0001652044-26-000018.

Full-year results

Revenue by line (2024 → 2025): Google Search & other $198,084M → $224,532M; YouTube ads $36,147M → $40,367M; Google Network $30,359M → $29,792M; Google advertising $264,590M → $294,691M; subscriptions, platforms, and devices $40,340M → $48,030M; Google Services total $304,930M → $342,721M; Google Cloud $43,229M → $58,705M (+36%); Other Bets $1,648M → $1,537M.

Search & other grew $26.4 billion on more search queries (user adoption and mobile usage), higher advertiser spending, and ad format/delivery improvements. YouTube ads grew $4.2 billion, led by direct response. Google Network declined $567 million on lower AdSense, partly offset by AdMob. Subscriptions, platforms, and devices grew $7.7 billion, driven by paid subscription growth at YouTube services and Google One. Cloud grew $15.5 billion, driven by Google Cloud Platform infrastructure and platform services. Monetization metrics: paid clicks +6%, cost-per-click +7%; Network impressions −7%, cost-per-impression +7%. Geography: US 48%, EMEA 29%, APAC 17%, Other Americas 6%.

Costs. TAC $54,900M → $59,926M; other cost of revenues $91,406M → $102,609M. The TAC rate fell from 20.7% to 20.3%, driven by mix shift away from Google Network toward Search & other; rates within each channel were substantially consistent. Other cost of revenues rose on YouTube content acquisition, depreciation, and technical-infrastructure operations. R&D $49,326M → $61,087M (+$11.8B), driven by $6.9B more employee compensation, including $4.2B more SBC, itself inflated by a valuation-based Waymo compensation charge, and $2.4B more depreciation. Sales and marketing $27,808M → $28,693M. G&A $14,188M → $21,482M, up $7.3 billion almost entirely on $6.2 billion more legal-and-other expense, largely the $3.5 billion EC fine accrued in Q3 2025 and a $1.4 billion legal accrual in Q2 2025.

Segment operating income (2024 → 2025): Google Services $121,263M → $139,404M (+$18.1B); Google Cloud $6,112M → $13,910M (+$7.8B); Other Bets −$4,444M → −$7,515M; Alphabet-level activities −$10,541M → −$16,760M. The Other Bets loss widened primarily on the Waymo valuation-based compensation charge ($2.1 billion recognized in Q4 2025). Alphabet-level activities, shared AI R&D, grew 59% year over year and is now the second-largest drag on consolidated operating income after cost of revenues.

Below the line. OI&E of $29,787M included $24,080M of net gains on equity securities, mostly unrealized marks on non-marketable holdings. Effective tax rate rose from 16.4% to 16.8% on a smaller Foreign Derived Intangible Income deduction and a non-deductible EC fine and US legal settlement, partly offset by prior-period position changes. The July 4, 2025 US tax law change allows immediate expensing of domestic R&E and accelerated depreciation on eligible capex, reflected in 2025 operating cash flow.

Cash and capital. Operating cash flow $125,299M → $164,713M. Investing outflow widened from $45,536M to $120,291M on property and equipment purchases and lower marketable-securities maturities. Financing outflow narrowed from $79,733M to $37,388M on more debt issuance and fewer buybacks. Capex was $91.4 billion. Cash, equivalents, and short-term marketable securities were $126.8 billion at year-end 2025. Senior unsecured notes outstanding rose from $11.9 billion to $48.5 billion; 2025 issuance raised $37.3 billion net. Alphabet repurchased 240 million shares for $45.4 billion; $69.5 billion remained under the April 2025 $70.0 billion authorization. Dividends totaled $4.8 billion (Class A), $703 million (Class B), and $4.5 billion (Class C), after an April 2025 increase of 5% to $0.21 per share.

Obligations disclosed at year-end 2025. Purchase commitments and other contractual obligations of $149.1 billion ($113.0 billion short-term, mostly technical infrastructure and inventory orders). Backstops via financial guarantees and credit derivatives with maximum future payments of $5.7 billion and $16.9 billion respectively. Short-term accrued legal and regulatory fines and settlements of $15.6 billion, primarily EC fines. Long-term income taxes payable of $9.5 billion. Multi-year non-cancellable power purchase agreements without minimum dollar commitments are not quantified.

Management's stated trends

Alphabet named these as the long-term forces shaping results: expanded AI offerings changing monetization models and margin trends; growth of non-advertising revenue at structurally lower margins; significantly increased technical infrastructure investment in 2026 relative to 2025, with depreciation, energy, equipment, and network capacity costs expected to increase significantly because AI serving requires more compute than legacy products; continued R&D and acquisition spend; TAC growing in dollars while the TAC rate declines on channel mix; continued use of debt, finance leases (primarily data centers), and credit support such as backstops and guarantees; and an evolving regulatory environment that has already produced fines and business-practice changes.

Critical accounting estimates most exposed to judgment: fair-value measurement of non-marketable equity securities (market/income approaches with unobservable inputs), useful lives of property and equipment (revised prospectively), income taxes and uncertain positions, and loss contingencies.

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Current quarter, three and six months ended June 30, 2026

From the 10-Q for the quarter ended June 30, 2026, accession 0001652044-26-000071, and the results release furnished on Form 8-K July 22, 2026, accession 0001652044-26-000066.

Headline

Six-month revenues were $229,692M versus $186,662M; six-month operating income $80,466M versus $61,877M; six-month OI&E $135,699M versus $13,845M.

Revenue growth was 23% in constant currency, the twelfth consecutive quarter of double-digit growth. Employees rose to 198,933 from 187,103 a year earlier.

What changed

Cloud is the story. Google Cloud revenues rose 82% to $24,768M (from $13,624M), and Cloud operating income rose from $2,826M to $8,814M, a 35.6% segment margin versus 20.7% a year ago. Growth came from Google Cloud Platform across enterprise AI solutions and infrastructure plus core GCP, and, newly, from product sales of TPU systems: Alphabet has signed a limited number of agreements to supply TPU systems to customers requiring on-premises infrastructure for specialized high-scale workloads, began recognizing revenue in Q2 2026, and expects the significant majority of that revenue to be recognized in 2027. Inventory on the balance sheet jumped from $2,439M to $9,991M over six months, consistent with hardware being built for delivery.

Revenue backlog of $519.5 billion, of which $513.9 billion is Google Cloud, just over 50% expected to convert to revenue within 24 months. (Note that in Q1 2026 Alphabet changed its backlog reporting to also include contracts with an original expected term of one year or less, so this figure is not comparable to earlier-basis disclosures.)

Services. Google Services revenues rose 15% to $94,540M; segment operating income rose $6.5 billion to $39,544M. Search & other rose $9.1 billion to $63,271M on query growth, advertiser spending, and ad format improvements; management attributes query growth to AI features in Search. YouTube ads rose $1.3 billion to $11,055M on direct response. Google Network fell $51 million to $7,303M on AdSense weakness. Subscriptions, platforms, and devices rose $1.7 billion to $12,911M on YouTube and Google One paid subscriptions. Monetization metrics: paid clicks +13%, cost-per-click +3%; Network impressions −12%, cost-per-impression +13%. Geographic mix shifted toward the US, 51% of revenue versus 48% a year ago.

Costs. TAC $16,179M (+$1.5B); the TAC rate fell from 20.6% to 19.8% on Network-to-Search mix. Other cost of revenues rose $5.4 billion on depreciation, inventory and other costs, YouTube content acquisition, and infrastructure operations. R&D rose $4.4 billion to $18,219M (employee compensation +$2.9B, depreciation +$592M). Sales and marketing rose $1.3 billion to $8,403M on advertising and promotion. G&A rose $1.3 billion to $6,461M, including a $1.5 billion charge related to a legal matter. Alphabet-level activities, shared AI R&D, widened from −$3,372M to −$5,789M. Other Bets loss widened to −$1,799M.

OI&E dominates reported earnings and is almost entirely non-cash. Net gains on equity securities were $99,031M in the quarter and $135,946M for the half, "primarily related to unrealized gains in our equity securities portfolio from SpaceX and a private company." As of June 30, 2026, marketable equity securities include $80.0 billion of SpaceX shares subject to short-term sale restrictions plus $14.1 billion of SpaceX shares restricted through the third quarter of 2027 (held in other non-current assets). The carrying value of non-marketable equity securities under the measurement alternative was $124.3 billion, of which $87.9 billion was remeasured to fair value during the quarter and was primarily Level 2 at the time of measurement; total initial cost of that book is $47,642M. Interest expense rose from $261M to $1,278M as debt scaled. The effective tax rate rose from 16.9% to 19.1%, attributed to higher pre-tax earnings from unrealized equity gains taxed at the statutory rate as deferred tax liabilities, deferred income tax liabilities on the balance sheet went from $919M to $22,819M in six months. Investors should read operating income, not net income, as the measure of the operating business this quarter.

Capital spending. Capex was $44.9 billion in the quarter and $80.6 billion for the six months, versus $39.6 billion in the prior-year half, more than doubling. Depreciation was $13.6 billion for the half. Property and equipment, net rose from $246.6 billion to $321.2 billion in six months, with assets not yet in service rising from $78.6 billion to $122.8 billion. Alphabet reiterates it expects to significantly increase 2026 technical infrastructure investment relative to 2025. Accrued purchases of property and equipment nearly doubled to $16,196M, and property and equipment in accrued liabilities and payables was $29,113M.

The balance sheet transformed. Total assets went from $595.3 billion to $922.0 billion in six months. Cash, equivalents, and marketable securities went from $126.8 billion to $242.5 billion. Long-term debt went from $46.5 billion to $98.2 billion (face value $101.1 billion). Goodwill went from $33.4 billion to $57.8 billion and intangibles from $1.3 billion to $9.1 billion, both from the Wiz acquisition. Total stockholders' equity went from $415.3 billion to $640.5 billion.

Financing, the defining event of the quarter. Alphabet raised capital across every instrument available:

• Debt: $20.0 billion of US-dollar senior unsecured notes and $31.8 billion of foreign-currency notes issued during the six months, Q1: $20.0 billion USD (weighted-average 4.80% coupon, 15-year), £5.5 billion (5.31%, 31-year), CHF 3.1 billion (1.06%, 10-year); Q2: €9.0 billion (3.90%, 13-year), C$8.5 billion (4.35%, 15-year), ¥576.5 billion (2.65%, 8-year). Proceeds from debt issuance, net of costs, were $56,226M for the half. $11.7 billion of credit facilities with $1.3 billion drawn; $25.0 billion commercial paper program undrawn.
• Common equity: On June 4, 2026 Alphabet completed an underwritten public offering of 29 million Class A shares at $355.1982 and 29 million Class C shares at $351.8018, for $20.5 billion net, and concurrently a $10.0 billion private placement of 14 million Class A and 14 million Class C shares to an affiliate of Berkshire Hathaway Inc., with registration rights to register resale.
• Preferred: On June 5, 2026 Alphabet issued 385 million Series A and Series B depositary shares representing 19 million shares of 6.25% Mandatory Convertible Preferred Stock (Series A indexed to Class A, Series B to Class C), $1,000 liquidation preference per share ($50 per depositary share), for $19.0 billion net. Dividends are cumulative, payable quarterly in cash or shares at Alphabet's election, starting August 15, 2026 and running through May 15, 2029. Mandatory conversion on or about May 15, 2029 at 2.2520–2.8160 Class A shares (Series A) or 2.2740–2.8420 Class C shares (Series B) per preferred share. Alphabet paid a $1.0 billion premium for capped call transactions with an initial cap price of $532.6704 (Class A) and $527.7974 (Class C), a 50% premium, to blunt conversion dilution.
• ATM: On June 1, 2026 Alphabet entered an equity distribution agreement for up to $40.0 billion of Class A and Class C stock, intended primarily to fund tax obligations on employee equity grants. None sold as of June 30, 2026.

Aggregate equity capital raise: $49.6 billion net, earmarked for general corporate purposes "including capital expenditures to scale AI infrastructure and global compute." Financing activities swung from a $26.0 billion outflow in the prior-year half to an $86.3 billion inflow.

Capital returns paused. There were no share repurchases in the three or six months ended June 30, 2026 (versus $28.3 billion of repurchases in the prior-year half); $69.5 billion remains authorized. The common dividend was raised 5% to $0.22 per share in April 2026. Six-month common dividends: $2.5 billion Class A, $359 million Class B, $2.4 billion Class C.

Off-balance-sheet and forward obligations expanded dramatically. Purchase commitments and other contractual obligations totaled $811.0 billion at June 30, 2026 ($200.7 billion short-term) versus $149.1 billion six months earlier, primarily technical infrastructure and inventory under long-term supply agreements and open purchase orders, plus content licenses and energy take-or-pay contracts (terms of two to 26 years, obligations through 2054). The commitments note gives $707.0 billion of expected future fixed or guaranteed commitments under contracts with remaining terms greater than one year, the significant majority long-term supply agreements. Separately:

• Backstops via financial guarantees of $7.6 billion and credit derivatives of $43.8 billion maximum future payments (from $5.7 billion and $16.9 billion at year-end 2025).
• An agreement to provide an estimated $24.1 billion of additional future backstops for data center and energy infrastructure build-out, subject to finalizing terms.
• $20.0 billion of future capital funding commitments to a private company, contingent on operational and financial milestones through 2030, accounted for as an equity derivative. Total future funding commitments to unconsolidated VIEs rose from $1.1 billion to $21.9 billion.
• Undiscounted future payments on leases not yet commenced of $85.2 billion, primarily data centers, commencing 2026–2031 with terms of one to 26 years, plus a June 2026 short-term lease with an approximately $5.8 billion non-cancelable commitment commencing in Q3 2026.
• Short-term accrued legal and regulatory fines and settlements of $17.4 billion (from $15.6 billion).

Acquisitions and divestitures completed in the half.

• Wiz closed March 11, 2026 for $29.5 billion after purchase price adjustments (below the $32.0 billion announced), excluding post-combination compensation. Allocation: $8,300M intangibles ($3,600M patents and developed technology, 7-year life; $4,500M customer relationships, 10-year; $200M trade names and other), $22,705M goodwill (not tax-deductible), $(1,538)M net liabilities assumed. Reported within Google Cloud.
• Intersect (renewable energy developer) closed March 10, 2026 for $5.9 billion after adjustments (announced at $4.8 billion cash plus assumed debt). Allocation: $2,174M goodwill, $5,129M property and equipment, $(1,214)M debt, $(221)M net liabilities. Intersect is a consolidated VIE; results allocated across segments.
• GFiber, March 2026 definitive agreement to contribute Alphabet's ownership interest into a newly formed entity in exchange for $1.5 billion cash, a $2.0 billion note receivable, and a 49.99% equity interest; the retained stake will be an unconsolidated VIE under the equity method. GFiber is classified held for sale (property and equipment of $7.1 billion in other current assets), depreciation ceased, no impairment on classification, results remain in Other Bets until close. Expected to close in late 2026.

Legal developments in the quarter. Alphabet recognized $2.1 billion of charges related to the Stockholm Patent and Market Court decision in the PriceRunner (a Klarna subsidiary) private action over the display and ranking of shopping search results, $1.5 billion of principal damages in G&A within Google Services and $581 million of accrued interest and costs in OI&E. Alphabet appealed. As reported in the legal note, the court awarded the plaintiff approximately $2.1 billion in principal damages plus accrued interest and costs.

Controls. Disclosure controls were concluded effective as of June 30, 2026, with no material changes to internal control over financial reporting during the quarter. Critical accounting estimates were unchanged from the 10-K except for the addition of business combinations, reflecting the Wiz and Intersect purchase price allocations.

Management's forward commentary. Alphabet does not provide numeric guidance. It reiterates that 2026 technical infrastructure investment will increase significantly relative to 2025, that the significant majority of TPU-system revenue under signed agreements will be recognized in 2027, and that it expects existing cash, short-term marketable securities, and cash flows from operations and financing to fund operations and commitments for at least the next 12 months. It is monitoring geopolitical tension, international trade, and the macroeconomic environment, and cautions that past results may not be indicative of future performance.

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Subsequent events

Post-period developments disclosed in the 10-Q for the quarter ended June 30, 2026, accession 0001652044-26-000071. Alphabet did not present a separate subsequent-events note; the following are drawn from the commitments and contingencies note, the stockholders' equity note, and the executive overview.

• EC Android fine became final and was paid. On July 2, 2026 the European Commission's 2018 Android decision was upheld, the European Court of Justice denied Google's appeal of the General Court's affirmation, making the decision final. In July 2026 Alphabet made a cash payment of $5.2 billion covering the fine plus accrued interest. The amount had been previously accrued, so the cash outflow lands in Q3 2026 without a further income-statement charge.

• Stockholm court ruling against Google (PriceRunner / Klarna). In July 2026 the Stockholm Patent and Market Court ruled against Google in the private action brought by PriceRunner, a subsidiary of Klarna, over the display and ranking of shopping search results, awarding approximately $2.1 billion in principal damages (denominated in multiple currencies) plus accrued interest and costs. Alphabet recognized the charge in the second quarter of 2026, $1.5 billion of principal damages in general and administrative expenses within Google Services and $581 million of interest and costs in other income (expense), net, and has appealed.

• Epic Games injunction. In July 2026 Epic and Google jointly withdrew their motion to modify the October 2024 Google Play remedies injunction. Google is complying with the October 2024 remedies decision.

• Dividends declared July 2026. The Board declared a quarterly cash dividend of $12.15 per share on each of the Series A and Series B mandatory convertible preferred stock (approximately $0.60 per Series A and Series B depositary share), payable August 15, 2026 to holders of record as of August 1, 2026, the first payment on the preferred issued in June. It also declared a quarterly cash dividend of $0.22 per share on Class A, Class B, and Class C stock, payable September 14, 2026 to holders of record as of September 7, 2026.

• Pending divestiture, GFiber. The March 2026 agreement to contribute Alphabet's GFiber ownership interest into a newly formed entity remains outstanding and is expected to close in late 2026, delivering $1.5 billion in cash, a $2.0 billion note receivable, and a 49.99% retained equity interest. GFiber is held for sale as of June 30, 2026 with $7.1 billion of property and equipment reclassified to other current assets.

• Lease commencing after the quarter. A short-term lease entered in June 2026 with a non-cancelable commitment of approximately $5.8 billion commences in the third quarter of 2026.

• Financial guarantee backstops. Backstop agreements supporting counterparty procurement of long-lead-time equipment for future power purchase and energy agreements carry varying terms through September 2026, with maximum potential future payments of $7.6 billion as of June 30, 2026.

No acquisitions or divestitures were announced or completed between June 30, 2026 and the filing date beyond those described above, and no financings were disclosed as occurring after the balance sheet date.