Alphabet Inc., the parent company of Google and YouTube, reported impressive first-quarter 2025 earnings on Thursday, outpacing Wall Street estimates and fueling a more than 4% rise in its shares during after-hours trading.

The tech giant posted a 12% year-over-year increase in revenue, reaching $90.2 billion, fueled by strong performance across Google’s core businesses and accelerating momentum in cloud computing and artificial intelligence. In constant currency terms, revenue grew by 14%.

Alphabet's net income surged 46% year-over-year to $23.66 billion, while earnings per share climbed 49% to $2.81. Operating income rose 20%, with operating margin expanding by two percentage points to 34%.

"Consolidated Alphabet revenues in Q1 2025 increased 12 per cent, reflecting robust momentum across the business, with Google Search & other, YouTube ads, Google subscriptions, platforms, and devices, and Google Cloud each delivering double-digit growth rates," the company stated in its report.

Alphabet's Google Services unit — which includes Search, YouTube ads, and subscriptions — contributed $77.3 billion in revenue, representing a 10% increase from the previous year. Growth in YouTube, hardware, and Google’s subscription platforms also supported the strong results.

Google’s CEO Highlights AI as a Key Growth Driver

CEO Sundar Pichai attributed the strong performance to Alphabet’s focused investments in artificial intelligence, calling it a "unique full stack approach to AI."

"This quarter was super exciting as we rolled out Gemini 2.5, our most intelligent AI model, achieving breakthroughs in performance and providing an extraordinary foundation for future innovation," said Pichai. "Search saw continued strong growth, boosted by engagement with features like AI Overviews, now reaching 1.5 billion users monthly."

During the earnings call, Google's Chief Business Officer Philipp Schindler emphasized that AI Overviews could become a major long-term revenue contributor, citing its largest expansion to new users and broader question coverage in Q1.

Massive AI Investment Commitment

Chief Financial Officer Anat Ashkenazi reported that $17.2 billion in capital expenditures this quarter primarily went into technical infrastructure — especially servers and data centers — to support Google services, Google Cloud, and Google DeepMind initiatives.

Despite external economic risks such as tariffs that could impact advertising revenues, Alphabet reaffirmed its commitment to artificial intelligence.
The company plans to invest $75 billion in AI developments throughout 2025, underscoring its belief that AI innovation will be critical to sustaining future growth.

Final Thoughts

Alphabet's Q1 2025 performance reflects the strength of its diversified portfolio across Search, YouTube, Cloud, and especially AI, setting a solid foundation for continued growth. With record user engagement in AI-driven services and a massive investment backing its future AI initiatives, Alphabet remains one of the most dynamic players in the tech industry.