Here’s our initial take on Alphabet‘s (GOOG) (GOOGL) fiscal 2025 second-quarter financial report.
Key Metrics
| Metric | Q2 2024 | Q2 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $84.74 billion | $96.43 billion | 14% | Beat |
| EPS | $1.89 | $2.31 | 22% | Beat |
| Google Cloud revenue | $10.35 billion | $13.62 billion | 32% | n/a |
| Operating margin | 32% | 32% | Flat | n/a |
Alphabet Is Seeing Accelerating Growth
At the start of 2025’s first three months, Alphabet surpassed predictions for its financial performance, showing impressive numbers on all fronts. In other words, the company demonstrated exceptional strength throughout its operations. Therefore, it is accurate to say that there was a great deal of anticipation as we moved into the second quarter.
In the second quarter, Alphabet surpassed predictions on both their income and profit margins. Their total income amounted to $96.43 billion, which was over $2 billion greater than projected, with about half a billion of that excess attributable to exceptional growth in Google Cloud revenue, exceeding expectations. On the profit side, Alphabet announced earnings per share (EPS) of $2.31, which was $0.04 more per share than what analysts had anticipated.
Beneath the news headlines, Alphabet’s overall business performance was robust. Google Cloud continues to be a major strength, showing a significant pickup with a 32% year-on-year increase in revenue, marking an improvement over the previous quarter’s growth pace. Meanwhile, the Google Services sector registered a 12% rise in revenue. Across all service divisions, the performance was commendable.
- Google Search revenue grew 12% to $54.2 billion.
- YouTube ad revenue grew 13% to $9.8 billion.
- Revenue from nonadvertising sources like subscriptions and hardware grew 20% to $11.2 billion.
Alphabet ended the second quarter with $95.1 billion in cash and securities on its balance sheet.
Immediate Market Reaction
15 p.m. EDT on Wednesday, Alphabet’s stocks were being traded approximately 1% below their original price.
A possible rephrasing could be: One plausible explanation for the negative sentiment might stem from Alphabet’s higher capital expenditures due to its rapid expansion of artificial intelligence (AI) systems. The firm has announced that it is boosting its 2025 capex projection to $85 billion (previously $75 billion), and spent approximately $22.4 billion in Q2 alone. Compared to the same quarter last year, this represents a 70% increase, and a 31% rise compared to the first quarter’s expenditure. While AI investments appear to be improving outcomes for the company, the current spending level could raise concerns among investors.
What to Watch
Google’s cloud income is currently the primary factor fueling growth, making it a crucial number to monitor closely. Additionally, it’s plausible that Google’s Other Bets sector, encompassing ventures like autonomous vehicle startup Waymo, might begin substantially boosting revenue within the next year or two. This could be especially true if the robotaxi business expansion proceeds at its current pace. In the second quarter, the Other Bets segment recorded a modest $373 million in revenue, but with Waymo’s ongoing rollout, this figure could expand substantially.
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2025-07-24 00:40