6. Fair Value Measurements
The following tables present the major security types we held at December 31, 2025 and 2024 that we regularly measure and carry at fair value. The following tables segregate each security type by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities’ fair value (in thousands):
| | | | | | | | | | | |
| | | At | | | | Quoted Prices in Active Markets | | | | Significant Other Observable Inputs | |
| | | December 31, 2025 | | | | (Level 1) | | | | (Level 2) | |
| Cash equivalents (1) | $ | 213,579 | | | $ | 213,579 | | | $ | - | |
| Corporate debt securities (2) | | 1,184,608 | | | | - | | | | 1,184,608 | |
| Debt securities issued by U.S. government agencies (3) | | 148,631 | | | | - | | | | 148,631 | |
| Debt securities issued by the U.S. Treasury (3) | | 1,012,746 | | | | 1,012,746 | | | | - | |
| Debt securities issued by states of the U.S. and political subdivisions of the states (3) | | 6,943 | | | | - | | | | 6,943 | |
| Publicly traded equity securities included in other current assets (4) | | 3,012 | | | | 3,012 | | | | - | |
| Total | $ | 2,569,519 | | | $ | 1,229,337 | | | $ | 1,340,182 | |
| | | | | | | | | | | |
| | | At | | | | Quoted Prices in Active Markets | | | | Significant Other Observable Inputs | |
| | | December 31, 2024 | | | | (Level 1) | | | | (Level 2) | |
| Cash equivalents (1) | $ | 180,445 | | | $ | 180,445 | | | $ | - | |
| Corporate debt securities (3) | | 1,032,066 | | | | - | | | | 1,032,066 | |
| Debt securities issued by U.S. government agencies (3) | | 208,998 | | | | - | | | | 208,998 | |
| Debt securities issued by the U.S. Treasury (3) | | 806,724 | | | | 806,724 | | | | - | |
| Debt securities issued by states of the U.S. and political subdivisions of the states (3) | | 7,524 | | | | - | | | | 7,524 | |
| Other municipal debt securities (3) | | 696 | | | | - | | | | 696 | |
| Publicly traded equity securities included in other current assets (4) | | 5,263 | | | | 5,263 | | | | - | |
| Total | $ | 2,241,716 | | | $ | 992,432 | | | $ | 1,249,284 | |
________________
The following footnotes reference lines in our consolidated balance sheets:
(1) Included in cash and cash equivalents.
(2) $47.8 million was included in cash and cash equivalents, with the difference included in short-term investments.
(3) Included in short-term investments.
(4) Included in other current assets.
Convertible Notes
Our 0% Notes due 2030, 1.75% Notes due 2028 and 0% Notes due 2026 had a fair value of $830.3 million, $918.1 million and $594.6 million at December 31, 2025, respectively. Our 1.75% Notes due 2028 and 0% Notes due 2026 had a fair value of $569.3 million and $612.8 million at December 31, 2024, respectively. We determine the fair value of our notes based on quoted market prices for these notes, which are Level 2 measurements because the notes do not trade regularly.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.