Alphabet, the parent company of Google and YouTube, has delivered its earnings report for the first quarter of 2025, exceeding market expectations on both revenue and profit. Its revenue for the quarter amounted to $90.2 billion, beating analysts’ consensus estimate of $89.2 billion. Net income surged to $34.5 billion, amounting to diluted earnings per share (EPS) of $2.81 and beating the estimated $2.01.
Advertising remains the backbone of Alphabet’s revenue model – generating a total of $66.9 billion in revenue for the quarter ended March 31. Its Search advertising business generated $50.7 billion, up from $46.2 billion in the same quarter last year and marking an annual growth of 9.8%. Meanwhile, revenue from YouTube advertising amounted to $8.93 billion. Alphabet’s operating income for the quarter amounted to $30.6 billion. while operating margin rose to 34%.
“We’re pleased with our strong Q1 results, which reflect healthy growth and momentum across the business. Underpinning this growth is our unique full stack approach to AI. This quarter was super exciting as we rolled out Gemini 2.5, our most intelligent AI model, which is achieving breakthroughs in performance and is an extraordinary foundation for our future innovation. Search saw continued strong growth, boosted by the engagement we’re seeing with features like AI Overviews, which now has 1.5 billion users per month. Driven by YouTube and Google One, we surpassed 270 million paid subscriptions. And Cloud grew rapidly with significant demand for our solutions,” Sundar Pichai, Alphabet CEO, commented on the matter.
Alphabet had, in the quarter, made a $32 billion acquisition of cybersecurity firm Wiz (the largest in its history) and now, its Google Cloud division recorded revenue of $12.26 billion, marking a 28% increase year-on-year, although marginally below expectations of $12.27 billion. Notably, the cloud segment’s operating margin improved significantly to 17.8%, up from 9.4% a year earlier. Revenue from Google Services rose by 10% on an annual basis to amount to $77.3 billion, while operating income from its Cloud and Services divisions amounted to $2.1 billion and $32.68 billion respectively.
Alphabet’s board has also authorized a $70 billion stock repurchase program, alongside a 5% increase in its quarterly cash dividend. The company’s financial performance for the quarter also comes with an $8 billion unrealized gain from its investment in a private company, reportedly Elon Musk’s SpaceX. To add to this, its Other Bets division – which contains Waymo, its autonomous car driving unit (which offers over 250,000 fully autonomous paid rides on a weekly basis in several US states) – generated $450 million in revenue, marking an annual decrease.
The earnings release comes at a time of heightened concern about global trade disruptions and regulatory pressure on Big Tech. President Donald Trump’s recent decision to revoke the de minimis tariff exemption, which allowed imports under $800 to enter the US duty-free, is expected to impact ad spending by retailers from Asia. Google executives acknowledged this change would create “a slight headwind” this year, particularly from companies such as Temu and Shein that have historically relied on low-cost imports and aggressive digital advertising.
