This article first appeared on GuruFocus.
Alphabet (GOOGL) is set to report fourth-quarter 2025 results on Wednesday, with options traders positioning for a larger-than-usual reaction.
Derivatives pricing suggests investors are bracing for a move of about 6% in either direction after earnings, above the stock’s average post-results swing over the past year. The setup reflects uncertainty around advertising trends and the pace of returns from artificial intelligence spending.
Markets are expected to focus first on advertising at Google Search and YouTube. Search demand has held up in recent quarters, while YouTube ad revenue has shown signs of recovery. Investors will be watching for clues on whether those gains can continue into 2026.
Attention is also on AI-related costs and revenue. Alphabet has expanded Gemini-powered features across its products and relies on its own Tensor Processing Units, or TPUs, to manage computing expenses. Updates on adoption and efficiency are likely to shape expectations.
Wall Street expects earnings of $2.63 a share on revenue of about $111.4 billion, implying solid year-over-year growth.
