Question
What will Alphabet report as Other Bets segment operating loss for full-year 2026?
Summary Alphabet's "Other Bets" segment reported a significant operating loss of $2.1 billion in Q1 2026 on revenues of $411 million 2 sources. This marks a sharp acceleration from early 2025, largely driven by Waymo's aggressive expansion and higher employee compensation expenses linked to its new $126 billion valuation following a $16 billion funding round stocktitan.net. Maintaining this Q1 run rate alone would result in a full-year loss of $8.4 billion. However, as Waymo targets 1 million fully autonomous rides per week by the end of 2026, it is deploying its new 6th-generation "Ojai" robotaxis across multiple new cities, which will require massive infrastructure investments 2 sources. While the segment structurally benefits from the recent deconsolidation of Verily and the expected Q4 deconsolidation of Google Fiber, the sheer scale of Waymo's capital-intensive build-out is expected to outpace these cost savings and near-term revenue growth. Consequently, quarterly losses are anticipated to hover around or slightly above the $2.1 billion to $2.4 billion range, placing the central expectation at approximately $8.7 billion for the year. The range of outcomes remains right-skewed to account for the possibility of a large year-end stock-based compensation true-up or impairment charge, similar to the $2.1 billion charge recorded in late 2025 sec.gov.
Strongest Arguments for Higher Values
- Escalating Waymo Expansion Costs: Scaling from 500,000 to 1 million rides per week and launching in new metropolitan areas will drive up operational expenses, including depot operations, vehicle maintenance, and localized support finance.yahoo.com.
- Elevated Compensation Expenses: Following its $16 billion funding round and $126 billion valuation, Waymo's stock-based compensation costs are structurally higher stocktitan.net.
- Risk of One-Time Charges: Alphabet's experimental ventures frequently incur significant impairment or compensation charges, such as the $2.1 billion charge seen in Q4 2025, which could unexpectedly spike the full-year loss sec.gov.
Strongest Arguments for Lower Values
- Structural Cost Removals: The deconsolidation of Verily, which was completed during Q1 2026, and the anticipated deconsolidation of Google Fiber in Q4 2026, will permanently remove significant cost buckets from the segment's ongoing run rate abc.xyz.
- Scaling Revenue: As Waymo doubles its ride volume and expands its commercial footprint, accelerating revenue growth could meaningfully offset some of the marginal costs of expansion sacra.com.
- Operational Efficiencies: The deployment of the new Ojai platform and economies of scale achieved through larger fleet operations could rapidly decrease the per-ride cost civilcalifornia.com.
Key Uncertainties
- Trajectory of Expansion Costs: The speed at which Waymo enters new markets and the upfront capital required for new infrastructure could fluctuate significantly depending on local regulatory approvals and operational friction.
- Valuation and Compensation Adjustments: Future secondary transactions or funding milestones could trigger unpredictable stock-based compensation true-ups.
- Timing of Divestitures: Any delays in the expected late-2026 deconsolidation of Google Fiber would prolong its inclusion in the segment's operating losses 2 sources.