Alphabet reported its first quarter 2025 results on Thursday, beating initial expectations.
Google CEO Sundar Pichai attributed the “strong first quarter results” to a “unique full-stack approach to AI.”
Google confirmed its commitment to invest $75 billion in AI this year.
Alphabet, the parent company of Google and YouTube, reported first quarter results after the close on Thursday, beating initial revenue expectations and sending its shares up more than 4% in after-hours trading.
Google CEO Sundar Pichai said in a statement that the company’s “strong first quarter results reflect healthy growth and momentum across the business,” reflecting its “unique full-stack approach to AI.”
“We had a very exciting quarter as we launched Gemini 2.5, our smartest AI model yet, which delivers breakthrough performance and provides an extraordinary foundation for future innovation,” Pichai said in the earnings release. “Search continues to see strong growth, driven by increased usage of features like AI Overviews, which now has 1.5 billion monthly users.”
Alphabet Inc. (which consists of Google and a group of companies called “Other Bets”) held a conference call with investors following the earnings report.
During the earnings call with investors, Google Chief Business Officer Philipp Schindler said AI Overviews could become a major revenue driver.
“Q1 was our largest expansion to date in AI Overview, both in terms of rolling out to new users and providing answers to more questions,” Schindler said.
“Overall, we continue to see roughly the same pace of monetization for AI Overview, which provides a solid foundation for further innovation,” he added.
Alphabet CFO Anat Ashkenazi said the bulk of the $17.2 billion in capital expenditures during the quarter was spent on technology infrastructure, “with the largest portion being server investments, followed by data centers,” to support growth across Google Services, Google Cloud and Google DeepMind.
In addition to this, Ashkenazi confirmed that Alphabet is committed to investing $75 billion in AI this year, despite headwinds such as tariffs that could hit advertising revenue.
Investing.com senior analyst Thomas Monteiro said in a note that Alphabet “has made a reasonable response to those who question the solidity of the search business” amid growing demand for AI.
“If you combine today’s numbers with Alphabet’s equally solid cloud performance, then we can all but confirm the company’s lead in the AI search revolution,” Montero said.
Here’s how key fourth-quarter numbers compared with analyst expectations:
Earnings per share: $2.81, vs. $2.01 expected
Revenue: $90.23 billion, vs. $89.1 billion expected
Google ad revenue: $66.89 billion, vs. $66.39 billion expected
YouTube ad revenue: $8.93 billion, vs. $8.94 billion expected
Google Cloud revenue: $12.26 billion, vs. $12.31 billion expected
Thursday’s earnings call also comes as Alphabet faces increased scrutiny from federal regulators. The U.S. Department of Justice and several states filed an antitrust lawsuit against Google in 2020. Four years later, a federal judge ruled that Google spent billions of dollars to make its search engine the default on iPhones, Android devices and web browsers.
District Judge Amit Mehta wrote: “After carefully considering and weighing the witness testimony and evidence, the court concludes that Google is a monopoly and that it has maintained its monopoly as a monopoly.”
This month, Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia ruled that Google has an illegal monopoly in certain online advertising markets.
In her ruling, Brinkema wrote that the Justice Department and the states that brought the antitrust lawsuit against Google proved that the company “willfully engaged in a series of anticompetitive practices to obtain and maintain monopoly power in the publisher ad server and open web display ad exchange markets.”
“For more than a decade, Google has tied its publisher ad server and ad exchange together through contractual policies and technological integrations that have enabled the company to establish and protect its monopoly in both markets,” Brinkema wrote.
Google and the Justice Department are currently in court over remedies related to the search engine ruling. The two sides will argue before the judge decides on the appropriate market remedies. Google, for its part, is trying to avoid being forced to divest certain products, such as the Chrome browser.
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