Alphabet Q1 2025: Earnings Surge with AI & Cloud Growth

Key Points:

Alphabet reported $90.23 billion of Q1 2025 revenues, above Wall Street estimates, on the back of AI innovation and strong cloud demand.

Shares of the company rose over 4% after hours on the news of earnings.

Key Facts:

Google Cloud revenue rose 28% year-over-year to $12.3 billion.

YouTube ad revenue rose 21%, while overall ad revenue was $66.9 billion.

Alphabet approved a $70 billion share repurchase and increased its quarterly dividend to $0.21.

Key Background :

Alphabet Inc., the parent company of Google, started 2025 on a positive note with a beat in a number of areas ahead of Wall Street estimates. Alphabet posted $90.23 billion revenue, or a 12% rise from the previous year, while net income rose by 46% to $34.54 billion, or $2.81 a share. These improved figures were contributed largely by Alphabet’s increased spend on artificial intelligence and rapidly growing cloud business.

It was Alphabet’s flagship AI model, Gemini 2.5, at the core of its Q1 momentum that is now available in most Google products, including Search. Alphabet stated that its AI-powered Search feature, AI Overviews, now has 1.5 billion monthly active users and increasing engagement and retention.

Google Cloud was the other standout, earning $12.3 billion revenue, which increased 28% year on year. This shows growing demand for advanced cloud solutions, specifically ones that encompass utilization of AI. Alphabet allocated budgeted capital expenses of $75 billion during the current year, with a significant majority focusing on constructing data centers and AI hardware.

Advertising remains a consistent source of revenue with ad revenues of $66.9 billion—a 8% boost. Ad revenue on YouTube was especially robust, rising 21% year-over-year due to brand and direct response campaigns. Network ad revenue did decrease to some degree, by 1%, tracking overall market trends.

Alphabet also pledged further to shareholder value by launching a gigantic $70 billion stock repurchase program and by increasing quarterly dividends by 5%, to $0.21 a share.

Even with its healthy bottom line, Alphabet continues to have regulatory problems. The corporation is facing the heat in a series of U.S. antitrust lawsuits in which judges have ruled that Google has monopolistic control over search and digital ad markets. While such legal constraints are a danger, Alphabet’s performance shows it is still forward-looking and AI- and cloud-innovation dependent on fueling its growth in an increasingly competitive technology landscape.