Alphabet Q3 2025 Earnings Beat Expectations as Cloud and AI Drive Growth
The company's biggest quarter yet hints at a company outgrowing its own definition, but what happens when search is no longer its main story?
• Alphabet’s $91 billion capital expenditure plan positions it as one of the world’s top three infrastructure investors.
• Google Cloud’s $15.2 billion revenue puts it roughly on par with IBM’s software division.
• Profit growth of 33% outpaces Microsoft, Meta, and Amazon in the same period.
Alphabet has always been a company of moments. The launch of Search made it indispensable, the birth of Android made it global, and the rise of YouTube made it cultural. Now it has reached another turning point. For the first time, Alphabet has crossed $100 billion in quarterly revenue, earning $34.9 billion in profit. But this is not just another milestone on a chart. It signals a company rewriting its identity in real time.
The story of this quarter is not about ads or phones or even video views. Instead, it's about how artificial intelligence, once a research experiment buried inside Google’s labs, is now the thread that runs through everything the company does.
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AI is no longer a bet, but a billion-dollar market for Alphabet
When Sundar Pichai described the last quarter as “terrific,” he was being modest. Alphabet’s new AI-first strategy is starting to look less like ambition and more like architecture. By building its own models, training them on its cloud, and distributing them across Search, YouTube, and Workspace, Google has created a self-reinforcing loop where every part of the company feeds into another.
Nowhere is that clearer than in Google Cloud. The division’s revenue climbed 34% year over year to $15.2 billion, while operating income more than doubled to $3.6 billion. Its backlog reached $155 billion, larger than Oracle’s annual revenue and roughly the size of a mid-tier economy. These are not short-term contracts. They are multi-year partnerships with companies that are building their own AI products on Google’s infrastructure.
Gemini, Alphabet’s flagship model, is at the center of this ecosystem. It now processes 7 billion tokens every minute, and its mobile app has reached 650 million active users. Those numbers are starting to look like YouTube’s early years, when a product became a platform that changed everything around it.
Can Alphabet's ad engine keep up with AI?
Even as artificial intelligence becomes Alphabet’s new growth engine, advertising still pays most of the bills. This quarter, ad revenue rose to $74.2 billion, with Search contributing more than $56 billion and YouTube growing 15% to $10.3 billion.
Yet the real story sits in a quieter line on the balance sheet. Subscriptions, platforms, and devices generated $12.9 billion, up 21% from the same period last year. Behind those numbers are 300 million people paying for YouTube Premium and Google One. It's a slow but deliberate shift toward recurring income, the kind of steady revenue that once made Apple’s services business its crown jewel.
Advertising is still the heartbeat of Alphabet, but subscriptions are becoming its pulse.
Techloy
The company that's building the internet’s power grid
What makes this quarter different isn't just how much Alphabet earned but how much it's building. The company’s property and equipment grew by 31% to $223.8 billion. Capital expenditure for the year is expected to reach between $91 billion and $93 billion, which would make Alphabet one of the three largest infrastructure investors in the world after Amazon and China Mobile.
This scale of spending shows how much the company is transforming from a software creator into a builder of physical systems that power the digital world. Its long-term debt has also doubled to $21.6 billion, while its non-marketable securities have climbed to $63.8 billion, reflecting investments in chips, data centers, and AI hardware partnerships.
Alphabet ended the quarter with $98.5 billion in cash and marketable securities. That war chest gives it the freedom to keep constructing what is quickly becoming the physical web for the age of AI.
Even its growth map is changing. The Asia-Pacific region recorded the fastest increase at 22%, followed by Europe, the Middle East, and Africa at 17%, and the United States at 13%. The demand for AI is no longer Western or regional. It is now planetary.
Emmanuel Oyedeji
Discipline in the Middle of Expansion
Despite facing a $3.5 billion fine from European regulators, Alphabet still managed to post $31.2 billion in operating income, a 9% increase from last year. Without the penalty, its profit would have grown by 22%, lifting its operating margin to 33.9%. That kind of efficiency is rare in a year of record research spending.
Meanwhile, research and development rose to $15.1 billion, up 21%, yet Alphabet’s workforce grew by only 5% to 190,000 employees. The company is spending more on innovation but not more on bureaucracy. It also returned $11.5 billion to shareholders through stock buybacks and maintained a $0.21 dividend, a signal that it's now behaving like a mature, steady-growth company in an AI-driven economy.
Alphabet is profiting from the hype it helped create
Alphabet’s profit story this quarter was not powered by operations alone. The company reported $12.8 billion in other income, mostly from $10.7 billion in unrealized gains on equity investments. That boost added $8.3 billion to net income and $0.68 to earnings per share.
In other words, Alphabet made money not just from selling AI but from the market’s growing belief in AI itself. It's now both the builder and the beneficiary of the hype it helped create.
The Bigger Picture
Alphabet’s $100 billion quarter is not a record to celebrate; it is a signal to interpret. The company that once organized the world’s information is now building the systems that process and distribute it. Google Cloud monetizes computation. Search and YouTube monetize discovery. Subscriptions monetize trust and loyalty. Each layer feeds the other in a design that is both commercial and structural.
Alphabet isn't only adapting to the AI era. It's defining its physical and economic foundation. Every query, every video, and every model trained now runs a little more on Google’s machines. The company that gave the internet its map is now building its power grid.
Emmanuel Oyedeji
