AI Data Center Plays Rallying on Alphabet Earnings

GOOG | Alphabet Inc. Q2’25 Earnings Highlights:

• Adj. EPS: $2.31 ✅; UP +22% YoY
• Revenue: $96.4B [✅]; UP +14% YoY
• Adj. Gross Margin: 32.4% [✅]; UP +40 bps YoY
• Net Income: $28.2B [✅]; UP +19% YoY

Q2’25 Outlook:

• Revenue: N/A

Q2 Segment Performance:

• Google Services Revenue: $82.5B [✅]; UP +12% YoY
• Google Cloud Revenue: $13.6B [✅]; UP +32% YoY
• Other Bets Revenue: $0.373B [✅]; UP +2% YoY

Other Key Q2 Metrics:

• Adj. Operating Income: $31.3B [✅]; UP +14% YoY
• Adj. Operating Expenses: $65.2B [✅]; UP +14% YoY
• R&D Expenses: $13.8B [✅]; UP +16% YoY
• Free Cash Flow: $5.3B; DOWN -70% YoY
• Effective Tax Rate: 16.9% (vs. 14.3% YoY)
• Number of Employees: 187,103; UP +4% YoY

CEO Commentary:

• Sundar Pichai: “We had a standout quarter, with robust growth across the company. We are leading at the frontier of AI and shipping at an incredible pace. AI is positively impacting every part of the business, driving strong momentum. Search delivered double-digit revenue growth, and our new features, like AI Overviews and AI Mode, are performing well. We continue to see strong performance in YouTube as well as subscriptions offerings. And Cloud had strong growth in revenues, backlog and profitability. Its annual revenue run-rate is now more than $50 billion. With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures in 2025 to approximately $85 billion and are excited by the opportunity ahead.”

Strategic Updates:

• In May 2025, Alphabet issued fixed-rate senior unsecured notes for net proceeds of $12.5 billion to be used for general corporate purposes.

Gemini’s app now has 450 million monthly active users. Stats like this will continue to turn around the narrative that Google isn’t competitive in AI.

As we predicted earlier, these earnings are just too good for shares to be in the red. Alphabet shares are now up 1.1% as of 5 p.m. ET. 

“AI overviews driving 10% more queries globally for the types of queries that show them” – Sundar Pichai

“I also want to mention Veo 3, our state-of-the-art video generation model. It’s been a viral hit, with people sharing clips created in the Gemini app, and with our new AI filmmaking tool, Flow. Since May, over 70 million videos have been generated using Veo 3. And we recently introduced a feature in the Gemini app to turn photos into videos, which people absolutely love.”

And hosted on YouTube, you can view it here.

Alpahabet’s results for last quarter were outstanding, but shares initially declined. They’ve now climbed back to being flat.

We’re surprised by the reaction so far, as the earnings seemed extremely solid. Once again, our best guess is that rising capital expenditure guidance is the largest ‘anchor’ holding back after-hours gains.

Search results were good, with the company surpassing Wall Street’s expectations. With fears that Search dominance would be eroded being the key concern headed into earnings, that’s a very big positive headed into next quarter.

Overall, we’d still expect Alphabet shares to be up tomorrow. There’s little not to like in these earnings.

Alphabet’s shares are now down 2%. Results looked solid, but the company once again raising capital expenditure expectations could be a reason for the negative reaction. We’ll continue digging into earnings.

Let’s take a look at how Alphabet’s growth looks across some key financial metrics:

Here’s a more detailed sumamary of Alphabet’s earnings:

Alphabet Inc. reported strong financial results for Q2 2025, with revenues reaching $96.4 billion, a 14% increase year-over-year.

The growth was driven by double-digit increases across Google Services, YouTube ads, and Google Cloud, which saw a remarkable 32% rise in revenues.

Operating income also grew by 14% to $31.3 billion, maintaining an operating margin of 32.4%. Net income increased by 19% to $28.2 billion, and EPS rose 22% to $2.31, surpassing the estimated EPS of $2.15.

CEO Sundar Pichai highlighted the company’s leadership in AI and the strong performance of new AI features in Search and Cloud. Alphabet also announced plans to increase capital expenditures to $85 billion in 2025, reflecting confidence in future growth opportunities.

• Alphabet’s Q2 2025 Earnings Soar with AI-Driven Growth
• Google Cloud Revenue Surges 32% in Q2 2025
• Sundar Pichai Announces $85 Billion CapEx for 2025 Amid Strong Cloud Demand
• Alphabet’s EPS Beats Estimates, Driven by AI and Cloud Expansion
• YouTube and Google Services Fuel Alphabet’s 14% Revenue Growth in Q2 2025
• Alphabet’s Net Income Jumps 19% as AI Features Boost Search Revenue

EPS of $2.31 

Revenue of $96.43 billion 

Both figures are solid beats.

And Alphabet shares immediately jump 2.5%. We’ll be posting more updates shortly.

We are officially 30 minutes away from the closing bell.

Alphabet shares have recovered slightly from their midday lows and the company is down about .33% in late trading.

As a reminder, we’ll be posting live analysis right after earnings are released. Simply stay on this page and new updates will load. We expect earnings to release shortly after 4 p.m. ET. 

Alphabet’s AI story is no longer theoretical. This table outlines how different business lines — from Search to Workspace — are integrating and monetizing Gemini-powered capabilities.

If you’re closely following Google’s earnings, one area to key in on is what management says about monetization from their AI overview results. The company announced ‘AI Mode’ to combat the rising threat of ChatGPT.

The more commentary the company provides on AI overviews providing not only engagement but also monetizing well, the better the reaction from Wall Street tomorrow.

Investors want to know if Alphabet can scale AI without eroding profitability. This table tracks margin trends alongside strategic investment in infrastructure and inference workloads.

Alphabet shares are up 15% in the past month as the narrative on the company shifts.

Whereas most discussion on Alphabet months ago centered around the disruption of their search business, Wall Street has been warming up to Alphabet recently.

For one, EPS revisions have been going up as positive ‘channel checks’ on search reveal it’s proving more defensible against the growth of chatbots like ChatGPT in the near term.

In the past 90 days, there have been 26 positive EPS revisions while only 10 were negative.

Another factor is that other parts of Alphabet’s business like Waymo, Google Cloud, and YouTube have all been performing at a high level.

In addition, the company is gaining traction in usage of its own Gemini suite of AI products.

The billion-dollar question tonight will be whether Google releases good enough earnings to continue turning its narrative around.

Alphabet’s strength lies in its breadth. This table breaks down Q1 revenue by segment, revealing where the real growth is coming from — whether it’s Search, YouTube, Cloud, or Other Bets.

Cloud returned to high-20s % growth, while Search and YouTube showed strength across both brand and performance formats

GOOG has posted four consecutive beats with consistently strong multi-day gains — investor confidence is high heading into Q2.