The tech giant reported $102.35 billion in revenue for the quarter, outpacing analysts’ average estimate of $99.89 billion, according to data from LSEG. The strong results sent Alphabet’s shares up 6% in extended trading, signaling renewed investor confidence in the company’s AI-driven growth trajectory.
Google Cloud once again stood out as one of the company’s fastest-growing segments, posting a 34% jump in revenue to $15.16 billion, well above the $14.72 billion expected. The growth was powered by a wave of enterprise adoption of AI infrastructure, analytics tools, and Google’s Vertex AI platform, as well as increased use of its custom Tensor Processing Units (TPUs).
The cloud division’s performance underscores Alphabet’s deepening push into enterprise AI, where it continues to narrow the gap with industry leaders Microsoft Azure and Amazon Web Services (AWS). However, the competitive landscape is heating up, as rivals race to cut prices and roll out new generative-AI capabilities to capture more market share.
Alphabet’s advertising business, which remains the backbone of its operations, also showed renewed momentum. Ad revenue climbed 12.6% to $74.18 billion, easily topping forecasts of $71.79 billion. The rebound helped ease investor concerns that AI-driven search disruption might undercut Google’s dominant ad franchise.
“Continued strength in search is helping to dispel the negative sentiment surrounding AI’s potential impact on Google’s biggest businesses,” noted Matt Stucky, chief portfolio manager at Northwestern Mutual Wealth Management.
Still, some analysts warned of uneven ad spending across sectors affected by tariff pressures and global trade volatility. Yet, the broader digital ad market remains resilient, with advertisers reportedly shifting budgets away from experimental platforms like Snapchat and other smaller rivals.
Alphabet also signaled its confidence in the long-term AI opportunity by sharply increasing its capital expenditure forecast for the year to between $91 billion and $93 billion — up from earlier projections of $85 billion in July, and a dramatic leap from the $52.5 billion spent in 2024. The spending spree has startled Wall Street twice this year, highlighting the company’s determination to maintain an edge in AI infrastructure and data center capacity.
The robust quarter comes amid intensifying competition across the AI ecosystem. Just last week, Microsoft and SoftBank-backed OpenAI unveiled Atlas, an AI-powered web browser that directly targets Google’s core search and Chrome businesses — a move analysts described as one of the most serious challenges to Google’s search dominance in years.
Alphabet ended the quarter with about 190,000 employees, up more than 8,000 from a year earlier, even as rival Amazon announced plans to cut 14,000 jobs.
For now, the combination of AI-fueled growth and a resilient ad market has put Alphabet firmly back in investors’ good graces — though with spending set to soar past $90 billion, all eyes remain on whether the company’s AI bets can continue to deliver at scale.