TL;DR — Alphabet pays much of its workforce in restricted stock units that settle in non-voting Class C shares. In 2024 it spent $62.0 billion buying back 379 million shares, yet the share count fell only 249 million. Roughly a third of the buyback offset employee issuance, and the gap widened afterward.
To the outside world, Alphabet is a collection of data centers and algorithms. To a shareholder, it is also a large circulation system of equity. At its center is the restricted stock unit (RSU), the main currency Alphabet uses to hire and keep engineers in a tight market for AI talent. Every time an RSU vests, new shares are created, and each existing share represents a slightly smaller slice of the company.
Alphabet pays its workforce in non-voting Class C stock
Alphabet’s stock plan is explicit about the currency. Under the Alphabet 2021 Stock Plan, an RSU is an agreement to issue Class C shares when the award vests, usually over four years. Class C stock carries no vote, while Class A has one vote per share and Class B, held largely by the founders, has ten.
That design lets Alphabet expand the economic share pool to pay employees without diluting voting control. For the employee, it is a retention tool. For the outside shareholder, it is a steady leak in the share count that has to be plugged with cash.
The scale is material. Alphabet recorded $22.8 billion of stock-based compensation in 2024. During the year it granted 195 million RSUs and 199 million vested, and it ended the year with $34.8 billion of unrecognized compensation cost still to be expensed over about 2.5 years.
About a third of the 2024 buyback only offset employee issuance
This is why Alphabet’s repurchase authorizations, $70 billion in both April 2024 and April 2025, need careful reading. A large portion of that money does not return value so much as keep the share count from rising. The mechanics work like a treadmill:
- Step 1, issuance: RSUs vest and new Class C shares are created for employees.
- Step 2, withholding: Alphabet withholds part of each award to cover taxes and pays the cash itself, $12.2 billion in 2024.
- Step 3, repurchase: Alphabet buys shares in the market, 379 million for $62.0 billion in 2024.
- Result: shares outstanding fell from 12,460 million to 12,211 million, a decline of 249 million, or about 2.0%.
Put the numbers together and roughly 130 million shares were added in 2024, mostly from employee equity. About a third of the shares Alphabet bought back simply absorbed that issuance. Only the remainder actually shrank the denominator that drives earnings per share.
Step 2 deserves more attention than it gets. When Alphabet withholds shares to cover an employee’s taxes, it avoids issuing those shares but pays the tax bill in cash. Economically, that is a buyback by another name, and it does not appear in the repurchase line. Add the $12.2 billion of withholding to the buyback and Alphabet’s 2024 cash outlay tied to its share count was about $74 billion.
The headline buyback is a gross number. Only the part above employee issuance makes your share of Alphabet larger.
The more useful metric is therefore net share count reduction, not dollars spent. We track the full series in our Alphabet RSU and stock-based compensation dilution report. None of this argues against RSUs. Shareholders want the best people building Gemini, but they should know what it costs.
Update: half the 2025 buyback was absorbed, and in 2026 buybacks stopped
Updated October 2026. The 2025 annual report showed the treadmill speeding up. Stock-based compensation rose to $25.0 billion, tax withholding payments to $14.2 billion, and repurchases fell to $45.4 billion for 240 million shares. Shares outstanding declined only 123 million, about 1.0%, which implies roughly 117 million new shares, close to half the buyback.
In 2026 the treadmill stopped entirely. Alphabet’s Q2 2026 10-Q reports no share repurchases in the first half, while stock-based compensation reached $14.7 billion. Shares outstanding rose from 12,088 million to 12,230 million, including 86 million shares sold in a June equity raise that partly went to an affiliate of Berkshire Hathaway.
The rising stock price cuts both ways. The average grant-date value of new RSUs rose from $140.04 in 2024 to $188.82 in 2025 and $292.21 in the first half of 2026. A higher price means fewer shares per dollar of compensation, but it also makes every share Alphabet might later buy back more expensive.
Two other details matter for anyone modeling dilution. Unrecognized compensation cost on unvested awards climbed to $59.1 billion at June 30, 2026. And Alphabet set up a $40 billion at-the-market program to sell Class A and Class C shares, with proceeds intended primarily to meet tax obligations tied to employee equity grants. The company is now issuing stock to fund the cash side of its RSU engine.
Our Alphabet share buyback tracker follows whether repurchases resume and how much of any new program goes to offsetting employee grants rather than shrinking the share count.
What to watch next: the quarterly 10-Q share count on the cover page, which is the cleanest read on net dilution; sales under the at-the-market program; and the ratio of stock-based compensation to revenue, which was about 6.2% in 2025. If buybacks stay at zero while grant values rise with the stock price, the share count will keep climbing, and the RSU engine will start costing shareholders in plain sight.
Sources and disclosure: Alphabet’s 2024 Form 10-K, 2025 Form 10-K and Q2 2026 Form 10-Q, available on SEC EDGAR and through Alphabet Investor Relations. The author owns Alphabet shares (GOOGL/GOOG). This article is for information only and is not investment advice; full disclosure is on our About page.
