Fair Value Measurements
The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of December 31, 2025 (in millions):
| | | | | | | | | | | | | | | | | | | | |
| | Level 1 | | Level 2 | | Total |
| Cash equivalents: | | | | | | |
| Money market funds | | $ | 2,055 | | | $ | — | | | $ | 2,055 | |
| Commercial paper | | — | | | 137 | | | 137 | |
| Corporate notes and bonds | | — | | | 6 | | | 6 | |
| | | | | | |
| Deposits | | 219 | | | — | | | 219 | |
| U.S. government and agency securities | | — | | | 515 | | | 515 | |
| Marketable securities: | | | | | | |
| Commercial paper | | — | | | 173 | | | 173 | |
| Corporate notes and bonds | | — | | | 4,793 | | | 4,793 | |
| Certificates of deposit | | — | | | 11 | | | 11 | |
| U.S. government and agency securities | | — | | | 1,263 | | | 1,263 | |
| Mortgage-backed and asset-backed securities | | — | | | 89 | | | 89 | |
| | | | | | |
| Total | | $ | 2,274 | | | $ | 6,987 | | | $ | 9,261 | |
The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of December 31, 2024 (in millions):
| | | | | | | | | | | | | | | | | | | | |
| | Level 1 | | Level 2 | | Total |
| Cash equivalents: | | | | | | |
| Money market funds | | $ | 1,357 | | | $ | — | | | $ | 1,357 | |
| Commercial paper | | — | | | 23 | | | 23 | |
| Corporate notes and bonds | | — | | | 4 | | | 4 | |
| | | | | | |
| Deposits | | 391 | | | — | | | 391 | |
| U.S. government and agency securities | | — | | | 14 | | | 14 | |
| Marketable securities: | | | | | | |
| Commercial paper | | — | | | 336 | | | 336 | |
| Corporate notes and bonds | | — | | | 4,976 | | | 4,976 | |
| Certificates of deposit | | — | | | 67 | | | 67 | |
| U.S. government and agency securities | | — | | | 2,104 | | | 2,104 | |
| Mortgage-backed and asset-backed securities | | — | | | 86 | | | 86 | |
| Total | | $ | 1,748 | | | $ | 7,610 | | | $ | 9,358 | |
We determine the fair value of our security holdings based on pricing from our service providers and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs), pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) or using unobservable inputs that are supported by little or no market activity (Level 3 inputs). Our strategic investments are not included in the table above and are discussed in Note 3 “Investments”. Refer to Note 8 “Derivative Contracts” for the fair value measurement of our derivative contracts and Note 12 “Debt” for the fair value measurement of our long-term debt, which are also not included in the table above.
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.