Alphabet, the parent company of Google and YouTube, reported robust first-quarter results for 2025, amid intensifying AI competition and economic concerns.
The tech giant surpassed Wall Street expectations, posting revenue of $90.23 billion, compared to $89.12 billion expected.
Below are the company’s financial highlights
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Earnings Per Share: $2.81, topping expectations of $2.01.
YouTube Advertising Revenue: $8.93 billion, slightly below the $8.97 billion forecast.
Google Cloud Revenue: $12.26 billion, marginally under the $12.27 billion expected, but up 28% year-over-year, driven by demand for AI infrastructure and generative AI solutions.
Traffic Acquisition Costs (TAC): $13.75 billion, slightly above the $13.66 billion anticipated.
Operating Income: Up 20%, with the operating margin expanding 2 points to 34%.
Net Income: Surged 46% to $34.54 billion, with EPS rising 49% to $2.81.
Business Segment Performance
Google Services: Revenues grew 10% to $77.3 billion, fueled by strong performance in Google Search, YouTube ads, and subscriptions, platforms, and devices. AI Overviews, now serving 1.5 billion monthly users, boosted Search engagement. YouTube and Google One drove subscriptions past 270 million.
Google Cloud: Revenues climbed 28% to $12.3 billion, reflecting growth in Google Cloud Platform, AI infrastructure, and generative AI solutions.
Commenting on the report, the CEO of Alphabet Sundar Pichai expressed satisfaction with the results, emphasizing the company’s AI-driven strategy.
He said,
“We’re pleased with our strong Q1 results, which reflect healthy growth and momentum across the business. Underpinning this growth is our unique full stack approach to AI. This quarter was super exciting as we rolled out Gemini 2.5, our most intelligent AI model, which is achieving breakthroughs in performance and is an extraordinary foundation for our future innovation. Search saw continued strong growth, boosted by the engagement we’re seeing with features like AI Overviews, which now has 1.5 billion users per month. Driven by YouTube and Google One, we surpassed 270 million paid subscriptions. The cloud grew rapidly with significant demand for our solutions.”
Sundar Pichai also mentioned “efficiency” as a means of trying to keep a lean company to weather potential macroeconomic challenges.
“If the macro environment were to change and become more downwardly volatile, how should investors think about the investments that are must-make this year, almost fixed in nature, versus where there might be more flexibility?” asked Eric Sheridan from Goldman Sachs.
Pichai responded that the company plans to continue consolidating teams and cutting back on costs elsewhere, which he said should help the company have a more resilient organization, irrespective of macroeconomic conditions.
Alphabet, which reported stronger-than-expected revenue for its first quarter of 2025, faces an online ad market that’s on edge due to concerns about how Trump’s tariffs will affect the economy and business spending.
The tech giant will likely be impacted by materials needed for technical infrastructure like data centers that it uses to power efforts in artificial intelligence. It could also see secondhand effects on advertising pullback from budget constraints.
Philipp Schindler, Google’s business chief, said the company is “not immune to the macro environment,” adding that President Donald Trump’s decision to end the de minimis trade loophole next month will “cause a slight headwind to our Ads business in 2025, primarily from APAC-based retailers.”
Looking Ahead
Alphabet’s Q1 2025 results highlight its resilience in a competitive AI landscape and challenging economic environment. With significant investments in AI $75 billion planned for 2025 and a focus on operational efficiency, the company is well-positioned to sustain growth in Search, Cloud, and subscriptions while addressing macro uncertainties.