Alphabet Inc.

What does it do?

Alphabet is the parent company of Google, the search engine that handles over 90% of global web searches. It makes money primarily from ads shown alongside those search results, but also owns YouTube (where people watch videos), Gmail, Google Maps, Android phones, and a cloud computing business. Think of it as a giant advertising platform that follows you across the internet—when you search for shoes, ads for shoe companies appear.

How does it make money?

Alphabet generates revenue almost entirely from advertising. Google Search ads account for the largest portion—advertisers pay when someone clicks their ad after searching. YouTube brings in roughly $30-35 billion annually from video ads. Google Cloud is the smaller but fast-growing division, providing data storage and computing services to businesses. The company earned $402.8 billion in revenue last year, up from $350 billion the prior year, with a net income of $132.2 billion, meaning roughly one-third of revenue drops to the bottom line as profit.

Why do investors care?

Investors are interested because Alphabet is a cash-generating machine in a sector shifting toward AI. The company is investing heavily in AI chips and large language models to defend search against new competitors and unlock new products. If these bets work—say, AI-powered search becomes more valuable or new AI services gain traction—the company could accelerate growth from its already massive base. The risk is whether these multi-billion dollar investments will ever offset the core advertising business's maturity.