Alphabet, Google's parent company, announced its first-quarter 2025 earnings, reporting revenue of $90.23 billion and earnings per share of $2.81, exceeding Wall Street analysts' expectations. This news boosted Alphabet's stock price by 4% in after-hours trading.
CEO Sundar Pichai attributed the strong performance to the robust performance of Google's core search business and stable advertising revenue. Advertising revenue grew 8.5% year-over-year to $66.89 billion, accounting for three-quarters of total revenue. While the growth rate slowed compared to the previous quarter, it still surpassed expectations. Google Cloud revenue reached $12.26 billion, a 28% year-over-year increase, slightly below analyst expectations and the previous quarter's 30.1% growth rate.
Alphabet's capital expenditures for the quarter totaled $17.2 billion, a significant 43% year-over-year increase. The company projects $75 billion in capital expenditures for the full year, primarily for data centers, AI hardware, and server infrastructure.
Notably, Google is accelerating its AI strategy. Its AI-powered search answer feature, AI Overview, boasts 1.5 billion monthly users. Pichai emphasized Google's "significant investment" in expanding this feature to more countries to reach a broader user base and address a wider range of search queries. This move is seen as a crucial response to the growing pressure from LLM-powered search competitors like ChatGPT and Perplexity. Furthermore, Google is testing a new search feature called "AI Mode" and has increased the reach and usage of its visual search tool, Circle to Search.
Along with the strong earnings, Alphabet announced a $70 billion stock buyback plan, further boosting investor confidence.
