Alphabet Shares Jump on Stronger-Than-Expected Revenue Growth in Q1 2025

California: Alphabet Inc., the parent company of Google and YouTube, reported robust first-quarter earnings on Thursday, exceeding Wall Street expectations and sending its shares up more than 5% in after-hours trading.

The tech giant reported $90.23 billion in revenue, surpassing analyst estimates of $89.12 billion, and earnings per share (EPS) of $2.81, well above the expected $2.01. Adjusted EPS, excluding an $8 billion unrealized gain from nonmarketable equity securities, was $2.27—still ahead of expectations.

Advertising and Search Resilience

Alphabet’s core advertising and search units remained resilient despite rising competition in the artificial intelligence space. The company's "Search and other" segment reported $50.7 billion in revenue, a 9.8% increase from a year ago. YouTube advertising revenue came in slightly below estimates at $8.93 billion, while overall advertising revenue rose 8.5% year-on-year to $66.89 billion.

Alphabet highlighted that its AI tool, AI Overviews, which features at the top of Google search results, now has 1.5 billion monthly users—up from one billion in October.

Cloud Revenue and Strategic Acquisitions

Google Cloud revenue totaled $12.26 billion, just below StreetAccount estimates of $12.27 billion. Still, the segment showed strong momentum with a 28% year-on-year revenue increase and margin improvement from 9.4% to 17.8%.

CEO Sundar Pichai emphasized the significance of the company's $32 billion acquisition of Wiz, finalized in March and expected to close in 2026. The acquisition—Alphabet’s largest to date—aims to boost the company’s security capabilities in multicloud computing.

Other Bets and Strategic Investments

The "Other Bets" segment, which includes ventures like Waymo and Verily, posted $450 million in revenue, down from $495 million a year ago. The segment reported a loss of $1.23 billion. Notably, Waymo is now offering more than 250,000 fully autonomous paid rides weekly across San Francisco, Los Angeles, Phoenix, and Austin—up from 200,000 in February.

CFO Anat Ashkenazi reiterated the company's capital expenditure guidance of approximately $75 billion for the year, with possible quarterly fluctuations.

Share Buyback and Forward Guidance

Alphabet’s board has authorized a $70 billion share repurchase program, mirroring last year’s move. Despite global macroeconomic challenges, the company remains confident in its long-term growth trajectory, citing continued strength across advertising, cloud, and AI-enabled services.

Philipp Schindler, Google's Chief Business Officer, acknowledged slight ad revenue headwinds due to U.S. policy shifts, including the upcoming termination of the de minimis trade loophole affecting APAC-based retailers. However, he stressed the company’s adaptability and data-driven approach to consumer trends across key verticals like finance, health care, travel, and retail.

Alphabet’s solid Q1 results underscore its operational resilience and strategic investment focus, reinforcing its leadership across multiple digital ecosystems.