Mountain View, CA – April 25, 2025 – Alphabet, the parent company of Google, announced strong financial results for the first quarter of 2025, exceeding analyst expectations and demonstrating significant growth, primarily fueled by its Cloud computing division and advancements in artificial intelligence. The report highlighted healthy momentum across the business, underscoring the company’s successful integration and monetization of its AI capabilities.
Q1 Financial Highlights Impress
For the quarter ending March 31, 2025, Alphabet reported total revenues of $90.2 billion, a solid 12% increase compared to the same period last year. Net income saw a substantial surge, climbing 46% year-over-year to reach $34.5 billion. This resulted in a diluted earnings per share of $2.81, up 49% from Q1 2024. The company also announced a 5% increase in its quarterly cash dividend to $0.21 per share and authorized an additional $70 billion in stock repurchases, signaling confidence in its financial position and future outlook.
Cloud and AI Lead the Charge
Google Cloud emerged as a standout performer, reporting revenues of $12.3 billion, a robust 28% increase year-over-year. More impressively, the Cloud division’s operating income saw a dramatic rise of 141.9%, reaching $2.2 billion, indicating increasing profitability in this key segment. CEO Sundar Pichai emphasized that the company’s “unique full stack approach to AI” was a central driver of growth, underpinning performance across various segments, including Cloud. He noted significant demand for Google Cloud Platform (GCP) solutions, particularly in AI infrastructure and Generative AI offerings.
Artificial intelligence is increasingly integrated across Google’s core products. Pichai highlighted that AI is powering new features and driving engagement, with AI Overviews in Search now reaching 1.5 billion monthly users. The recent rollout of the Gemini 2.5 Pro model achieved performance breakthroughs, and the company has seen a significant increase in active users of AI Studio and the Gemini API. AI is also playing a growing role internally, with over 30% of code at Google now being written with AI assistance.
Investments in AI Infrastructure Continue
To support the escalating demand for AI and Cloud services, Alphabet continued to make substantial investments in its technical infrastructure. Capital expenditures for the first quarter stood at $17.2 billion, a 43% increase year-over-year. These investments are primarily directed towards building out data centers and acquiring servers to bolster AI capabilities and overall operational capacity. The company anticipates investing approximately $75 billion in CapEx for the full year 2025, reinforcing its commitment to supporting future growth in AI and Cloud.
Growth Across Google Services
Beyond Cloud, Alphabet’s core Google Services segment, which includes Search, advertising, and YouTube, also delivered healthy results. Total Google Services revenues grew 10% to $77.3 billion. Within this, Google Search & Other revenues increased by 9.8% to $50.7 billion, while YouTube advertising revenues grew 10.3% to $8.9 billion. Subscription platforms and devices also contributed to growth, with revenues up 19% and paid subscriptions across services like YouTube Premium and Google One surpassing 270 million. The “Other Bets” segment, which includes ventures like Waymo, saw a decrease in revenue and incurred a loss, although Waymo reported significant growth in weekly paid passenger trips.
Navigating Challenges and Outlook
Despite the strong financial performance, Alphabet continues to face significant challenges, including ongoing antitrust lawsuits in the U.S. that could potentially impact key parts of its business. The competitive landscape in AI is also rapidly evolving. Questions remain about the long-term sustainability of current levels of massive AI investment. However, the Q1 results, coupled with the increased dividend and share buyback authorization, were met positively by investors, sending the stock higher in after-hours trading and indicating confidence in the company’s ability to execute its strategy and leverage AI for continued growth across its diverse portfolio.
