Alphabet beats revenue expectations in Q2 2025, raises the stakes with massive AI investment plan
Even as AI tools are gaining ground, Google Search remains Alphabet’s cash cow.
Alphabet is putting serious money behind its AI ambitions. The second-quarter earnings reveal a company not just confident in its artificial intelligence but willing to invest staggering sums to secure its lead.
In its second-quarter earnings report, Alphabet revealed plans to raise capital expenditures to $85 billion in 2025, a sharp increase from the $75 billion it projected just five months ago. That money is going toward cloud infrastructure and AI. And the scale of this investment signals growing confidence that these technologies are central to the company’s long-term strategy.
A "standout quarter" across the board
That confidence lines up with a quarter that delivered on nearly every metric. Alphabet reported $96.43 billion in revenue, beating expectations and climbing 14% year over year. Net income hit $28.19 billion, up from $23.62 billion a year ago. Operating income reached $31.27 billion. Strong growth in search, YouTube, cloud, and subscriptions drove the performance.
CEO Sundar Pichai struck a confident tone in the earnings call, saying Alphabet had a “standout quarter” and highlighted AI as a driving force across the business. He pointed to the success of tools like AI Overviews, now reaching more than 2 billion users monthly across over 200 countries, up from 1.5 billion last quarter. Gemini, Alphabet’s AI chatbot app, also crossed 450 million monthly active users.
Core businesses continue to power growth
But even as AI tools are gaining ground, Google Search remains Alphabet’s powerhouse, bringing in $54.19 billion in revenue this quarter. YouTube ad revenue grew to $9.8 billion, while subscriptions and hardware sales under the “Platforms and Devices” category hit $11.2 billion, up from $9.31 billion the year before. Cloud continues to be one of the fastest-growing segments, with $13.62 billion in revenue, a 31% jump from last year, and an annualized run rate that now exceeds $50 billion annually.
Alphabet’s Other Bets segment, which includes Waymo and Verily, brought in $373 million in revenue but posted a wider loss of $1.25 billion. While still a small part of the business, the division reflects Alphabet’s continued appetite for high-risk, long-term plays.
Analysts had expected $94 billion in revenue and $2.18 in earnings per share. Alphabet beat both, delivering $2.31 in EPS. Despite the strong results, shares dipped slightly in after-hours trading, likely due to investor unease over the scale of next year’s planned investment.
Alphabet is betting that whoever controls the infrastructure will control the next phase of AI. More compute power, faster delivery, and tighter integration are the goals, and the company is building toward them at full speed. The tech giant is building for dominance, and it’s ready to pay for it.
