Alphabet Boosts AI Investments as Cloud Revenue Surges, Beating Q2 Expectations

Alphabet will seek to reassure investors as AI rivals step up competition

July 22 (Reuters) - Alphabet (GOOGL.O), opens new tab, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. THE CONTEXT Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total $320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. THE FUNDAMENTALS ** Alphabet is expected to report a near 11% jump in total revenue for the second quarter, per LSEG data. ** Analysts expect a 7.5% rise in advertising revenue and a 26.2% jump in its cloud computing segment. ** Per-share earnings are expected to be around $2.18, excluding one-off items. WALL STREET SENTIMENT ** Alphabet shares are largely flat so far this year. ** Stock is among the laggards in the "Magnificent Seven" group of megacap stocks, with Nvidia (NVDA.O), opens new tab leading the range with a 28% jump and Tesla (TSLA.O), opens new tab at the bottom with a 19% decline. ** Alphabet is rated "buy" on average among 55 brokerages, with a median price target of $203.84. Reporting by Deborah Sophia and Zaheer Kachwala in Bengaluru Editing by Rod Nickel Our Standards: The Thomson Reuters Trust Principles., opens new tab

Google parent Alphabet surprises with capital spending boost after earnings beat

July 23 (Reuters) - Alphabet (GOOGL.O), opens new tab on Wednesday cited massive demand for its cloud computing services as it hiked its capital spending plans for the year to about $85 billion and predicted a further increase next year. The search giant strongly beat Wall Street estimates for quarterly revenue and profit on the back of new AI features and a steady digital advertising market. Revenue growth was driven by Google Cloud's sales, which surged nearly 32%, well above estimates for a 26.5% increase. "With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures." CEO Sundar Pichai said in an earnings release. Shares of the company, which have risen more than 18% since its previous earnings report in April, dipped initially in extended trading after the report before rallying as executives shared details about strong cloud demand on a call with analysts. But investors were surprised by the planned capital spending increase. "I don't think anyone was expecting a change to that 2025 capex guide," said Dave Wagner, portfolio manager at Aptus Capital Advisors. "Google had an amazing quarter. It was an easy beat, and it was just offset by this $10-billion increase in capex." Capital spending is expected to increase further in 2026 due to demand and growth opportunities, Chief Financial Officer Anat Ashkenazi said on the call. Ashkenazi added that while the pace of server deployment has improved, Alphabet continues to face more customer demand for its cloud services than it can supply. Google had earlier pledged about $75 billion in capital spending this year, part of the more than $320 billion that Big Tech is expected to pour into building AI capabilities. CLOUD GAINS The rise of artificial intelligence technologies has propelled demand for cloud computing services. Google Cloud still trails Amazon's (AMZN.O), opens new tab AWS and Microsoft's (MSFT.O), opens new tab Azure in total sales, but has tried to gain ground by touting AI offerings, including its in-house TPU chips that rival Nvidia's GPUs. The business segment grew its quarter-over-quarter customer count by 28%, Pichai said on the call. "The comprehensiveness of our AI portfolio, the breadth of our offerings, both providing our models on GPUs and TPUs for our customers, all of that has been really driving demand," he said. In a huge win for Alphabet, ChatGPT maker OpenAI recently added Google Cloud to its list of cloud capacity suppliers, as Reuters exclusively reported in June, in a surprising collaboration between two companies that are competing head-to-head in AI. It also marked OpenAI's latest move to diversify beyond its major backer Microsoft. The capex increase nevertheless raises concerns about Alphabet's pace of monetization and its impact on near-term profitability, Investing.com senior analyst Jesse Cohen said. Alphabet and its peers have defended their aggressive AI spending amid rising competition from Chinese rivals and investor frustration with slower-than-expected payoffs, saying those massive investments are necessary to fuel growth and improve their products. AI RACE Google Search's artificial intelligence features such as AI Overviews and AI Mode are also helping the company boost engagement and tackle rising competition from chatbots such as ChatGPT that have surged in popularity. AI Mode has grown to 100 million monthly active users just two months after Google announced the start of its large-scale rollout during its annual developer conference. Google's own ChatGPT competitor, called Gemini, has more than 450 million monthly users, Pichai said. Google's advertising revenue, which represents about three-quarters of the tech major's overall sales, rose 10.4% to $71.34 billion in the second quarter, beating expectations for $69.47 billion, according to data from LSEG. "Hopefully, this will damper concerns by the investment community that has been worried that products like OpenAI/ChatGPT could be having an impact on Google's Search query growth," said Dan Morgan, senior portfolio manager at Synovus Trust. Alphabet reported total revenue of $96.43 billion for the second quarter ended June 30, compared with analysts' average estimate of about $94 billion, according to data compiled by LSEG. The company reported profit of $2.31 per share for the period, beating estimates of $2.18 per share, according to LSEG data. Reporting by Deborah Sophia in Bengaluru and Kenrick Cai in San Francisco; Editing by Devika Syamnath and Rod Nickel Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Kenrick Cai Thomson Reuters Kenrick Cai is a correspondent for Reuters based in San Francisco. He covers Google, its parent company Alphabet and artificial intelligence. Cai joined Reuters in 2024. He previously worked at Forbes magazine, where he was a staff writer covering venture capital and startups. He received a Best in Business award from the Society for Advancing Business Editing and Writing in 2023. He is a graduate of Duke University.

Alphabet jumps as AI-driven spending fuels cloud revenue surge

July 24 (Reuters) - Alphabet shares (GOOGL.O), opens new tab rose nearly 3% before the bell on Thursday as the Google parent's earnings underscored a key message to investors: AI spending is climbing, but so are the returns. The tech giant has raised its 2025 capital spending forecast by $10 billion to $85 billion and signaled even higher outlay next year, stepping up efforts to meet soaring cloud demand and stay competitive in Silicon Valley's escalating AI race. Its cloud-computing unit delivered an almost 32% jump in second-quarter revenue, surpassing expectations, as investments in in-house chips and the Gemini AI model began to pay off. The results bode well for rivals Microsoft (MSFT.O), opens new tab and Amazon.com (AMZN.O), opens new tab, both of which have been stepping up data center investments and operate larger cloud businesses. "Google came back fighting this quarter," said Bernstein analyst Mark Shmulik. "Investors have long been clamoring for Google to get more 'aggressive' in the AI race," he added. An early AI pioneer with its invention of the Transformer model - the foundation of most modern generative AI - Google appeared to fall behind OpenAI and Microsoft last year. But it has rebounded this year, with AI Mode reaching 100 million monthly users just two months into its wider rollout, and Gemini surpassing 450 million monthly users. Its ad business, which accounts for about three-quarters of its sales, also continues to fare well in the face of economic uncertainty wrought by tariffs and geopolitical tensions. Revenue in the business a rose better-than-expected 10.4%, a positive sign for rivals such as Meta (META.O), opens new tab and Snap (SNAP.N), opens new tab that rely on digital ads for most of their revenue. At least 17 brokerages raised their price targets on Google stock after the results, taking the median target to $210. Still, some analysts warned the higher spending may draw fresh scrutiny from investors, who have largely stayed on the sidelines this year. Alphabet shares are up just 0.5% in 2025, trailing Microsoft's 20% increase and 21% rise in Meta stock, also held back by regulatory battles that are looking to break its illegal monopoly in the search and the ad-tech market. Alphabet's 12-month forward price-to-earnings ratio stands at 18.88, trailing Microsoft's (MSFT.O), opens new tab 33.03 and Amazon's (AMZN.O), opens new tab 33.31, according to data compiled by LSEG. "On paper, it has all the right tools to lead in AI - cutting-edge models and massive distribution," said Matt Britzman, senior equity analyst, Hargreaves Lansdown. "That said, until there's more confidence AI integration won't cannibalise core search revenue, and some clarity around ongoing legal battles, there's enough uncertainty to cap near-term upside." Reporting by Kanchana Chakravarty in Bengaluru and Danilo Masoni in Milan; Editing by Samuel Indyk Our Standards: The Thomson Reuters Trust Principles., opens new tab

Google parent Alphabet beats quarterly revenue estimates, boosts capital spending

July 23 (Reuters) - Alphabet (GOOGL.O), opens new tab beat Wall Street estimates for its second quarter on Wednesday, and cited massive demand for its cloud computing services as it hiked its capital spending plans for the year to about $85 billion. The search giant beat estimates for quarterly revenue and profit on the back of new AI features and a steady digital advertising market. Google Cloud's revenue growth surged nearly 32%, well above estimates for a 26.5% increase. "With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures." CEO Sundar Pichai said in an earnings release. Shares of the company, which have risen more than 18% since its previous earnings report in April, were down 1% in extended trading. Google had earlier pledged about $75 billion in capital spending this year, part of the more than $320 billion that Big Tech is expected to pour into building AI capabilities. The companies have defended their aggressive AI spending amid rising competition from Chinese rivals and investor frustration with slower-than-expected payoffs, saying those massive investments are necessary to fuel growth and improve their products. Alphabet reported total revenue of $96.43 billion for the second quarter ended June 30, compared with analysts' average estimate of about $94 billion, according to data compiled by LSEG. Google's advertising revenue, which represents about three-quarters of the tech major's overall sales, rose 10.4% to $71.34 billion in the second quarter, beating expectations for $69.47 billion, according to data from LSEG. Reporting by Deborah Sophia in Bengaluru and Kenrick Cai in San Francisco; Editing by Devika Syamnath and Rod Nickel Our Standards: The Thomson Reuters Trust Principles., opens new tab

Google parent Alphabet beats quarterly revenue estimates, boosts capex plan

July 23 (Reuters) - Alphabet (GOOGL.O), opens new tab beat Wall Street estimates for quarterly revenue on Wednesday on the back of new AI features and a steady digital advertising market, and said it would boost its capital spending plans for the year to about $85 billion. Shares of the company, which have risen more than 18% since its previous earnings report in April, were down 1% in extended trading. Google had earlier pledged about $75 billion in capital spending this year, part of the more than $320 billion that Big Tech is expected to pour into building out AI capabilities. The companies have defended their aggressive AI spending amid rising competition from Chinese rivals and investor frustration with slower-than-expected payoffs, saying those massive investments are necessary to fuel growth and improve their products. Alphabet reported total revenue of $96.43 billion for the second quarter ended June, compared with analysts' average estimate of about $94 billion, according to data compiled by LSEG. Reporting by Deborah Sophia in Bengaluru; Editing by Devika Syamnath Our Standards: The Thomson Reuters Trust Principles., opens new tab

What major analysts think about Google parent Alphabet ahead of Q2 earnings

Google parent Alphabet is among the first of the ' Magnificent 7 ' companies to report second-quarter earnings, with results due after the stock market closes on Wednesday. Shares of Alphabet have barely budged this year, lagging the other 'Magnificent 7' stocks as well as the S & P 500 . Investor concern is focused on the shifting search and advertising landscape, given the rise of artificial intelligence chatbots that risk Google's competitive edge. Still, analysts are generally bullish on Google's search and ad monetization for the second quarter. Wall Street is expecting the YouTube owner to post double-digit earnings and revenue growth, according to LSEG. Analysts expect Alphabet to report earnings of $2.18 per share, up 15.5% year over year, on revenue of $93.94 billion, up 10.9%. Investors may be worrying unnecessarily, however, based on history. Alphabet earnings have beaten expectations for nine straight quarters, according to Bespoke Investment Group, and the stock tends to rise an average of 1.3% in the first session after results are announced. Here's what Wall Street is expecting from Alphabet results: Goldman Sachs: buy rating and $225 price target Analyst Eric Sheridan called out investor uncertainty toward Google's search business given the rise of consumer AI apps, and a lack of clarity around the Department of Justice's antitrust case against Google. Still, he remains bullish on the company's transformation towards being an "answer engine" rather than just a search engine. "We continue to highlight GOOGL as one of the most compelling risk/reward skews (based on our upside/downside work) from current levels," Sheridan wrote in a July 10 note. "We continue to view GOOGL's ability to distribute AI solutions (Gemini being at the center) across an array of existing desktop/mobile computing applications (Gmail, Search, Chrome, Drive, Maps, YouTube, Photos) as underappreciated." BMO Capital Markets: outperform, price target raised $8 to $208 Analyst Brian Pitz reintroduced Alphabet as a "top pick," highlighting that its shares are selling for 18 times the company's expected earnings over the next 12 months, below an average multiple of 22 times over the past five years. Pitz said a growing AI user base for Google's search business will lead to higher returns on advertising. "As AI monetization continues to evolve, we believe Google will increasingly leverage its over twenty years of AI initiatives to continue expanding [return on ad spend] for its advertisers," he said, highlighting that YouTube is also integrating "AI Overviews" in its search results, which could increase engagement. Bank of America: buy, price target up $10 to $210 Analyst Justin Post raised his estimates and expects strong results. "2Q positives could include: 1) Commentary suggesting ad spend has accelerated since April, 2) Strong search results suggesting AI integration aiding monetization (lowering revenue reset risk), 3) YouTube beat on easy y/y comps, and 4) Cloud strength from added capacity & Workspace AI integration," Post said in a July 18 note. JPMorgan: overweight, $200 price target Analyst Doug Anmuth said Google "continues to move fast in AI" and rates the stock overweight. His price target implies about 5% potential upside from Monday's close. "Positive into the print as our GOOGL checks were positive around Search, YouTube & Cloud while Google's AI innovations continue to impress," Anmuth wrote in a note to clients. "AI & Cloud investments, esp. depreciation (JPMe +46% Y/Y to $5.4B), will weigh on margins (JPMe GAAP OIM -140bps Y/Y to 31%), but continued durable re-engineering of cost base needs to provide offset." Deutsche Bank: buy, $200 price target Analyst Benjamin Black believes Alphabet shares have room to appreciate at the same time as he acknowledged the lackluster performance against online advertising peers and the stock lagging the market since first-quarter results were released. "Sentiment continues to weigh negatively on Google on concerns around share loss at Search long term, as statcounter estimates 14bps of share loss globally since the end of March," Black wrote in a July 14 note to clients. "That said, our ad checks indicate that near-term revenue trends accelerated in the 2Q ... and we slightly increase our 2Q Search estimate to account for favorable FX tailwinds to 9% y/y (7% FXN), slightly above the street." UBS: neutral, price target raised $6 to $192 UBS lifted its price target to $192, still suggesting limited upside from where Alphabet closed Monday. The bank increased its 2025 and 2026 revenue forecast, partly due to an improvement in the advertising environment. "We remain Neutral weighted given mid-term uncertainty from regulatory outcomes (Search case remedy due August), limited resolution on impact from AI Overviews integration with more signs emerging that click through rates are down, and ongoing pressure from GenAI Search competitors with ChatGPT still gaining usage share," analyst Stephen Ju wrote in a July 16 note.

Google's AI push pays off with solid second quarter, but doubts about company's future persist

SAN FRANCISCO (AP) -- Google's accelerating shift into artificial intelligence helped propel its corporate parent to another quarter of solid growth while a crackdown on its internet empire looms in the background. The results released Wednesday for the April-June period provided the latest sign that Google is deftly navigating the technological landscape's tilt toward AI while still capitalizing on well-worn techniques that have made it the internet's main gateway for the past quarter century. That balancing act helped Google parent Alphabet Inc. earn $28.2 billion, or $2.31 per share, during the second quarter, a 19% increase from the same time last year. Revenue climbed 14% from a year ago to $96.4 billion. Both figures easily eclipsed analysts' projections. "We had a standout quarter, with robust growth across the company," Alphabet CEO Sundar Pichai said. "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." The numbers were initially overshadowed by a disclosure that Alphabet is increasing this year's budget for capital expenditures by $10 billion to $85 billion as part of its effort to fend off intensifying competition from AI startups such as OpenAI's ChatGPT and Perplexity. Besides those threats, a federal judge who declared Google's search engine to be an illegal monopoly is now weighing a range of countermeasures that include requiring the sale of its popular Chrome browser. Alphabet's shares dipped 1% in extended trading after the quarterly report came out. After initially dipping following the disclosure about the rising costs of AI, Alphabet's stock price rebounded and rose by more than 1% in extended trading. The performance covered a stretch that saw Google bring even more AI technology into its search engine in an effort to maintain its dominance, including the May release of its own version of a conversational answer engine called AI Mode. That addition supplemented its more than year-old use of extensive summaries called AI Overviews that Google now frequently highlights at the top of its results page while decreasing the number of its traditional links to other websites. The shake-up has resulted in even more interaction with Google's search engine and steady earnings growth to support Alphabet's $2.3 trillion market value, said Jim Yu, chief executive of BrightEdge, a firm that analyzes search trends. Google's search-driven ad revenue totaled $54.2 billion in the past quarter, a 12% increase from the same time last year. "All this AI stuff is not slowing Google down, they are doing a very good job of evolving with the times," Yu said. The AI boom has also been fueling demand in Google's Cloud division that sells computing power and other services. Google Cloud continued to thrive in the past quarter with revenue rising 32% from a year ago to $13.6 billion. The division is under pressure to deliver robust growth from investors to help justify Google's huge investments in AI technology.

Alphabet to report Q2 earnings after the bell

Alphabet CEO Sundar Pichai speaks at a Google I/O event in Mountain View, Calif., Tuesday, May 20, 2025. Alphabet is set to report its second-quarter earnings after the bell Wednesday. Here's what analysts polled by LSEG are expecting: Wall Street is also watching these numbers in the report: Alphabet is among the megacaps expected to be a major driver of earnings growth during the second-quarter earnings season. Wall Street is anticipating the search giant to report a 10.9% increase in revenue and 15% growth in earnings per share. Shares of Alphabet haven't moved much this year, lagging the other Magnificent Seven stocks and the S&P 500. Investors are primarily concerned about the rise of artificial intelligence chatbots, which could impact Google's ability to remain competitive in search. During the second quarter, the search giant rolled out a number of new AI products. At its annual Google I/O conference in May, Google announced a new subscription tier, called "Google AI Ultra," that offers access to the company's "cutting edge" AI features for $249.99 per month. Google also unveiled its return to the smart glasses market with a $150 million partnership with Warby Parker -- the two companies said they plan to launch a series of smart glasses as soon as next year. Google in May also announced a venture fund to invest in AI startups. As part of the "AI Futures Fund," eligible startups will receive Google investment, early access to AI models, and hands-on support from Google researchers, engineers and go-to-market specialists. They also get credits to use on Google Cloud. Additionally in May, Google began testing the placement of its "AI Mode" product on its home page, directly beneath the Google search. Earlier this month, OpenAI added Google to its list of suppliers, saying it expects to use the search company's cloud infrastructure for its popular ChatGPT service. The announcement represented a win for Google, whose cloud unit is younger and smaller than those of Amazon and Microsoft. Google made a splash in the AI talent wars, announcing it would bring in Windsurf CEO Varun Mohan and other top researchers at the artificial intelligence coding startup as part of a $2.4 billion deal that also includes licensing the company's technology. Internally, Google also made a number of personnel changes during the quarter. The company added the new role of chief AI architect when it elevated Koray Kavukcuoglu from his position as Google DeepMind's chief technology officer in June. Google also made more workforce reductions by offering buyouts to U.S.-based employees across several of its divisions, including search, ads and commerce. Alphabet made several strides with Waymo, its self-driving car unit, during the quarter. Waymo reached 100 million "real world, fully autonomous miles" driven on public roads, the company said last week. Waymo also announced expansions into new markets. In June, Waymo announced plans to drive vehicles manually in New York, marking the first step toward potentially cracking the largest U.S. city. In July, the company said it will do limited testing in Philadelphia and it began offering accounts for teens ages 14 to 17, starting in Phoenix. The company also endured some less-flattering optics during the quarter. In June, Google's cloud suffered significant global outages knocking down or disrupting dozens of large internet services, including OpenAI and Shopify, among others.

Alphabet signals 'AI arms race' is alive and well, analysts say

Alphabet's strong earnings report seems to be quashing any fears on Wall Street that the artificial intelligence trade has peaked. The Google parent's second-quarter results -- released on Wednesday afternoon -- painted a healthy picture of the tech stalwart's current AI ambitions. Back in February, the company forecast it would invest an expected $75 billion in capital expenditures this year as builds out its AI offerings. But on Wednesday, the company upped this figure to $85 billion, justifying this increase by pointing to "strong and growing demand for our Cloud products and services." Boosted by Alphabet's positive second-quarter earnings, chip stocks such as Nvidia , Broadcom , Micron , ASML and Advanced Micro Devices all rose during Thursday's session. GOOGL 1D mountain Alphabet shares in the past day If Alphabet's earnings report is any indication, the competition amongst tech old guards to build the best and biggest AI products is merely in its first innings, according to Wolfe Research. "Alphabet's results provided further fuel for the AI spending narrative as demand for AI products drove an increase in sales and capital spending, with GOOGL raising its outlook to spend an additional $10B in 2025," the firm wrote in a Thursday note. It continued: "Our sense is GOOGL's results will continue to spur the AI 'Arms Race' across Mag 7 companies and the market as a whole. We expect further upside revisions to capital spending by the Mag 7 over the course of this earnings season as the race heats up and companies continue to invest heavily as aggregate spending is set to grow 40% y/y in 2025." Wall Street's reaction Across Wall Street, analysts such as Bernstein's Mark Shmulik and UBS' Randy Abrams highlighted Alphabet's foray into the AI arena as they parsed the company's results . "Investors have long been clamoring for Google to get more 'aggressive' in the AI race, with solid performance in Search and Cloud pointing to solid [return on invested capital] thus far," Shmulik wrote. "Google was the first hyperscaler to report and will be a positive signal if its peers echo similar sentiment of higher demand further pushing up spending and delaying the point on catching demand," Abrams said. "For the tech supply chain, TSMC already kicked off the season discussing its expectations on AI led demand through 2026 and we expect hardware results over the next few weeks to still see ramps though 2H25." Meanwhile, Deutsche Bank analyst Benjamin Black pointed to this increased AI demand as a bright spot on Alphabet's latest report. "Capex expectations for FY25 increased by $10bn to $85bn despite continued supply constraints as AI Investments and Cloud infrastructure supply requirements still outpace demand," Black wrote. Brian Nowak, an analyst at Morgan Stanley, underscored that Alphabet's innovative investments could be a longer-term catalyst driving upside in the years to come. "Search, YouTube and Google Cloud all accelerated as GenAI-enabled innovation is driving faster growth," the analyst said. "Our EPS ests are largely unchanged.... but we remain OW as this accelerated pace of innovation sets up GOOGL for more durable multi-year growth." Barclays analyst Ross Sandler and Ronald Josey of Citi pointed out that Wednesday's results show that Alphabet's previous investments are finally beginning to pay off. "Alphabet showed off a lot of great metrics in 2Q, everything from search paid clicks to cloud revenues are accelerating on the back of years of heavy AI investments," Sandler wrote. "Given Google's Commercial and AI queries continue to grow as its AI surfaces support more use cases now that AI-O is global, AI Mode expands, and Gemini adoption ramps, Google's newer products appear to be resonating as its strategy comes into view," Josey added. JPMorgan analyst Doug Anmuth was similarly bullish on the company's print. "Google delivered what we believe is a defining quarter w/32% Google Cloud revenue growth, increasing scale of AI search products, and greater benefits from AI across every part of the business," Anmuth said. "We believe the combination of strong AI-driven Cloud demand and accelerating backlog makes Google Cloud a bigger driver of the bull case going forward."

Alphabet Earnings Show 14% Revenue Increase as Google Faces A.I. Competition

David Streitfeld has written about Google since it was a start-up. Whether Google will be a winner in the race for dominance in artificial intelligence won't be clear for at least a year or two. In the meantime, its bottom line is doing just fine. Alphabet, Google's parent company, reported second-quarter results on Wednesday afternoon that were better than expected. Revenue rose 14 percent from a year earlier to $96.4 billion, while earnings per share jumped 22 percent to $2.31. Analysts expected revenue of $93.98 billion and earnings per share of $2.20. "A.I. is positively impacting every part of the business, driving strong momentum," the company's chief executive, Sundar Pichai, said in a statement. Investors appeared underwhelmed. After an initial spike, Alphabet shares were largely flat on the news. The company said capital expenditures for the year would be $10 billion higher than it had been projecting. Even for Google, the new estimate of $85 billion is real money. Uncertainty over whether Google would continue to enjoy robust revenue and profits became widespread earlier this year. At one point, the company's shares were down 25 percent. One big concern was search, which provides more than half of Google's revenue and three-quarters of its profits. As search begins to lose ground to A.I. queries, Google risks being overtaken by competitors. Its long reign as search king -- and the advertising dollars that flow out of it -- is imperiled. Google has immense strengths, very deep pockets and universal brand awareness. It can afford to hire all the A.I. stars it needs. Still, the history of tech is full of onetime powerhouses, like the mobile device maker BlackBerry and the social media site MySpace, that failed to anticipate the future. OpenAI's ChatGPT has quickly become a viable Google competitor. Analysts estimate that the daily total of ChatGPT queries is between 15 percent and 20 percent of Google's search volume. That already makes it more of a threat to Google than Microsoft's Bing search engine ever was. Melissa Otto, head of research at S&P Global Visible Alpha, installed ChatGPT on her phone a while back, partly out of professional curiosity. The results impressed her. ChatGPT does not, at least at the moment, have ads, so its answers seem fuller and more authentic to Ms. Otto. "Generative A.I. is still in an early phase, but it's very user friendly," she said. "I was using it to plan a vacation, asking what were the best family cruises. You're not looking at a series of sponsored links. Search isn't great for asking questions. I can see my own user behavior starting to change." This is exactly what Google does not want to hear. Company executives have said they are moving aggressively on A.I. Two months ago, Google introduced AI Mode, a feature in its search engine that functions like a chatbot and competes directly with ChatGPT. (The New York Times has sued OpenAI and its partner, Microsoft, over claims of copyright infringement of news articles for A.I. models. Both companies have denied the claims.) Investors appear to have been reassured. Google shares have largely recovered from their winter swoon. Its ad business has proved less vulnerable to President Trump's tariffs than some analysts feared. Google executives have one relentless message, Gene Munster of Deepwater Asset Management wrote in a research note this week: "A.I. is a tailwind for search, not a headwind." The genuine competition arrives at a weird time for Google, which was officially declared a monopolist in two antitrust trials. Judge Amit P. Mehta of U.S. District Court in Washington, D.C., is likely to rule on how the company should fix its monopoly in internet search before Labor Day. The government has proposed a breakup of Google as one solution. AI Mode says that it is unclear what will happen, but that it will have significant implications.

Google expected to report $94bn in revenue after AI fuels second quarter

Wall Street is expecting the search giant to report $2.18 in earnings per share following the bell on Wednesday Google is expected to report earnings following the bell on Wednesday after closing out a quarter of AI-related momentum that has given investors reasons to be optimistic. Wall Street is expecting the search giant to report $2.18 in earnings per share (EPS) on $94bn in revenue. All eyes will be on how the company's various AI efforts and investments are faring as Google closes a quarter of considerable growth in the crowded space. Most recently, OpenAI announced it would add Google Cloud to its suite of cloud storage providers for ChatGPT. Analysts are also expecting a favorable outlook on general growing demand for Google's cloud services. "The cloud business continues to benefit from robust enterprise demand, and the recent decision by OpenAI to run ChatGPT on Google Cloud - after relying primarily on Microsoft - is both symbolic and strategic," Scott Acheychek, COO of Rex Financial, said in a statement. "It speaks to scale. It speaks to speed. And it underscores how Alphabet's in-house AI stack is quietly turning into a competitive asset, winning business from names like Apple and Anthropic." While analysts still expect the company to report positive results for the second quarter of the year, some are concerned about its recent series of antitrust losses. A judge in April found that the firm acted illegally to build a monopoly of some of its advertising technology. That follows an August ruling that found Google engaged in anticompetitive behavior to protect its search monopoly. They're also looking for updates on recent analyses and remarks that indicate Google searches have declined for the first time in 22 years. During Google's recent antitrust trial, for instance, the Apple senior vice-president of services Eddy Cue said Google searches in Safari had fallen for the first time in 22 years. He attributed that to the rise in the use of AI chatbots like ChatGPT, Perplexity, Gemini and Microsoft Copilot for searches. "Search remains the dominant cash engine - and a tension point," Acheychek said. "While OpenAI's ChatGPT is arguably a threat to Google's search business, it's also a customer. That duality sums up the moment. This isn't necessarily a winner-take-all race; it's a scramble to serve the exploding demand for generative tools, wherever they may live." Google is also expected to give updates on its planned $75bn investment in building out its data center capacity to support its AI features such as its expansion of AI search results. "It seems this is a necessary investment as the only factor limiting Google's growth is the constraints on computing that AI and cloud solutions need to run on," said Brian Mulberry, senior portfolio manager at Zacks Investment Management.

Alphabet sees results soar, boosted once again by soaring AI and cloud demand

Alphabet has exceeded quarterly revenue expectations by a not-so-insignificant $2.43 billion by posting $96.43 billion in its second quarter 2025, marking a health 14% year-over-year increase, with the company having AI and its cloud services to thank. Google Cloud revenues rose by 32% in the quarter to $13.6 billion - considerably more than the 12% rise in Google Services revenue, which covers areas like Search, subscriptions, devices, YouTube ads and more. In a blog post breaking down the earnings, CEO Sundar Pichai revealed Google Cloud's annual revenue run-rate has now passed the $50 billion mark. "We are seeing significant demand for our comprehensive AI product portfolio," Pichai explained in the post. "We operate the leading global network of AI optimized data centers and cloud regions." Pichai added nine million developers have now built with the company's Gemini 2.5 family of models, while 70 million videos have already been generated using Veo 3, which Pichai described as a "viral hit." Speaking about Google Cloud revenue in particular, Pichai revealed the number of large contracts worth more than $250 million has more than doubled year-over-year. Google Cloud also signed the same number of $1 billion+ deals in the first half of 2025 as it did in the whole of 2024. Wayfair, Mattel, Target, Capgemini and BBVA were cited among Google Cloud's major clients, with OpenAI also recently confirming that it would use Google Cloud infrastructure to support ChatGPT in the US, the UK, Japan, the Netherlands and Norway. On the consumer side, the Gemini App now has more than 450 million monthly active users, and daily request have grown by more than 50% since last quarter. All of this saw stock prices rise by about 3% in after-hours trading, with Google currently ranking as the world's fifth-most valuable company with a market cap of $2.315 trillion, just a few paces behind Amazon.

Google Q2 earnings: Wall Street looks for AI answers

Google parent Alphabet is set to post its second-quarter earnings Wednesday after the market closes, and Wall Street is gearing up for what it hopes could be another surprisingly lucrative quarter. Last quarter, Google's parent company significantly surpassed Wall Street's expectations, highlighting momentum across its search, cloud, and AI businesses -- sectors that will likely show similar success this quarter. Zacks Investment Research projected on Friday that Alphabet will report an earnings per share of $2.14, which would be up 13.2% year-over-year, and sales of $79.25 billion, up 11.1% year-over-year. Alphabet's reported earnings have outpaced Zacks' projections for the last four quarters. Charley Blaine at the Street said Monday that Alphabet is expected to post an earnings per share of $2.16, showing an increase of 14.3% from last year, plus revenue of $87.9 billion, up 3.8%. Blaine adds that Alphabet's shares are down 2.2% this year and "analysts will surely want to know how much -- and when -- all the investments will start to flow to the bottom line." Morningstar said on Monday it will be looking for updates on the company's "generative artificial intelligence search, its monetization rates, and the health of the overall search business." Analysts added that they expect a "pickup in the back half of 2025" for Google Cloud, and say that although Google has "arguably the best model out there" with Gemini 2.5 Pro, it still has to prove it can "translate that technical leadership into commercial success." In its first-quarter earnings, Alphabet posted a net income of $34.5 billion on $90.2 billion in revenue -- a 12% year-over-year increase that beat Wall Street's estimate of $89.2 billion. The company also reported earnings per share of $2.81; analysts were expecting that number to be $2.01. Net income increased 46%. The company also announced a $70 billion stock-buyback program and said it will increase its quarterly cash dividend by 5% to $0.21. Google's search engine has seen a lot of competition to its service from AI challengers lately. ChatGPT and other AI-native tools are starting to pull traffic and attention away from traditional search engines by answering questions directly. According to a recent report from Mary Meeker, ChatGPT hit a billion searches a day in less than two years; Google needed 11 years to reach that mark. Perplexity AI, the startup backed by Nvidia, Jeff Bezos, and SoftBank, is taking direct aim at Google Chrome with its latest launch: an AI-powered web browser called Comet. Google has been rapidly kicking up its AI investment to try to keep up. The company added "AI Mode" and "AI Overviews" features to its search pages. It also recently announced a new $3 billion investment in hydropower for its AI data centers, part of Google's larger $25 billion investment in data centers. Plus, the tech company has been offering employee buyouts so it can move funds over to AI. Regardless of AI's ups-and-downs, Google Search still remains the largest revenue driver for the company. Last quarter, Google Search revenue grew almost 10% year-over-year to $50.7 billion. Google's ad revenue was $66.8 billion in the quarter. Google's AI chatbot Gemini AI has been fairly successful, even as it trails behind ChatGPT. Google announced a partnership with Volvo in May to put its AI chatbot in vehicles later this year. The tech company also has expanded its footprint in cloud computing with Google Cloud. It holds the third-largest market share in the global cloud infrastructure space, behind Amazon Web Services and Microsoft Azure. Google Cloud's revenue reached $12.3 billion last quarter. Meanwhile, the tech giant has been battling two antitrust lawsuits, one for allegedly monopolizing online search and another to dismantle the company's ad tech empire. It's also dealt with a cease and desist order in Japan and a $4.7 billion antitrust charge in the European Union. Alphabet's self-driving unit Waymo is doing pretty well, especially compared to competitors like Tesla. It has been operating commercial, driverless rides in cities including Phoenix and San Francisco since 2023 -- and in Austin since March. Waymo is methodically planting flags in city after city, with a recent addition in Atlanta via Uber. Yet even with its success, Waymo isn't a big revenue driver quite yet. -- Shannon Carroll, Kevin Ryan, Jackie Snow, and Emily Price contributed to this article.

Google's Q2 earnings beat Wall Street's expectations

Alphabet, the parent company of Google, beat analysts' expectations in its second quarter earnings posted Wednesday after the market closed. The tech giant posted an earnings per share of $2.31 on $96.4 billion revenue, surpassing Wall Street's projections for the second straight quarter. The results show an increase in revenue from $90.2 billion but a drop in EPS from $2.81 compared to last quarter's earnings. Zacks Investment Research projected on Friday that Alphabet would report an earnings per share of $2.14, which would be up 13.2% year-over-year, and sales of $79.25 billion, up 11.1% year-over-year. Alphabet's reported earnings have outpaced Zacks' projections for the previous four quarters. Charley Blaine at The Street said Monday that Alphabet was expected to post an earnings per share of $2.16, showing an increase of 14.3% from last year, plus revenue of $87.9 billion, up 3.8%. Blaine added that Alphabet's shares are down 2.2% this year and "analysts will surely want to know how much -- and when -- all the investments will start to flow to the bottom line." Analysts were mostly focused on getting updates on Alphabet's AI and cloud computing investments, which proved to be major revenue drivers this quarter. The tech company cited "double-digit growth" from Google Search, YouTube ads, Google subscriptions, platforms, and devices, and Google Cloud. Google Services delivered $82.5 billion in revenue, up 12% year-over-year, while Google Cloud brought in $13.6 billion in revenue, a 32% increase. Alphabet CEO Sundar Pichai said the company had a "standout quarter" citing "robust growth" across businesses. "We are leading at the frontier of AI and shipping at an incredible pace," Pichai said in a release. "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." Pichai added that Google Cloud had strong growth in revenue, revenues, backlog and profitability, noting that 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," he said. Alphabet's stock closed at $191.51, down from Tuesday's close of $192.11, before the company released its earnings for this quarter, according to MarketWatch.

Google-parent Alphabet earnings shine with help of AI

Google-parent Alphabet on Wednesday reported quarterly profits that topped expectations, saying artificial intelligence has boosted every part of its business. Alphabet's second-quarter profit of $28.2 billion -- on $96.4 billion in revenue -- came with word that the tech giant will spend $10 billion more than it previously planned this year on capital expenditures, as it invests to meet growing demand for cloud services. "We had a standout quarter, with robust growth across the company," said Alphabet chief executive Sundar Pichai. "AI is positively impacting every part of the business, driving strong momentum." Revenue from search grew double digits in the quarter, with features such as AI Overviews and the recently launched AI mode "performing well," according to Pichai. Ad revenue at YouTube continues to grow along with the video platform's subscription services, Alphabet reported. Alphabet's cloud computing business is on pace to bring in $50 billion over the course of the year, according to the company. "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," Pichai said. Alphabet shares were up nearly 2% in after-market trades that followed the release of the earnings figures. Investors have been watching closely to see whether the tech giant may be pouring too much money into artificial intelligence and whether AI-generated summaries of search results will translate into fewer opportunities to serve up money-making ads. The internet giant is dabbling with ads in its new AI Mode for online search, a strategic move to fend off competition from ChatGPT while adapting its advertising business for an AI age. The integration of advertising has been a key question accompanying the rise of generative AI chatbots, which have largely avoided interrupting the user experience with marketing messages. However, advertising remains Google's financial bedrock. "Google is doing well despite tariff headwinds and rising AI competition in search," said eMarketer principal analyst Yory Wurmser. "It's also successfully monetizing AI Overviews and AI Mode, a good sign for the future." Google and rivals are spending billions of dollars on data centers and more for AI, while the rise of lower-cost model DeepSeek from China raises questions about how much needs to be spent. Antitrust battles Meanwhile the online ad business that generates the cash Google invests in its future could be neutered due to a defeat in a US antitrust case. During the summer of 2024, Google was found guilty of illegal practices to establish and maintain its monopoly in online search by a federal judge in Washington. The Justice Department is now demanding remedies that could transform the digital landscape: Google's divestiture from its Chrome browser and a ban on entering exclusivity agreements with smartphone manufacturers to install the search engine by default. District Judge Amit Mehta is considering "remedies" in a decision expected in the coming days or weeks. In another legal battle, a different US judge ruled this year that Google wielded monopoly power in the online ad technology market, another legal blow that could rattle the tech giant's revenue engine. District Court Judge Leonie Brinkema ruled that Google built an illegal monopoly over ad software and tools used by publishers. Combined, the courtroom defeats have the potential to leave Google split up and its influence curbed. Google said it is appealing both rulings.

Google-parent Alphabet earnings shine with help of AI

San Francisco (United States) (AFP) - Google-parent Alphabet on Wednesday reported quarterly profits that topped expectations, saying artificial intelligence has boosted every part of its business. Alphabet's second-quarter profit of $28.2 billion -- on $96.4 billion in revenue -- came with word that the tech giant will spend $10 billion more than it previously planned this year on capital expenditures, as it invests to meet growing demand for cloud services. "We had a standout quarter, with robust growth across the company," said Alphabet chief executive Sundar Pichai. "AI is positively impacting every part of the business, driving strong momentum." Revenue from search grew double digits in the quarter, with features such as AI Overviews and the recently launched AI mode "performing well," according to Pichai. Ad revenue at YouTube continues to grow along with the video platform's subscription services, Alphabet reported. Alphabet's cloud computing business is on pace to bring in $50 billion over the course of the year, according to the company. "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," Pichai said. Alphabet shares were up nearly 2 percent in after-market trades that followed the release of the earnings figures. Investors have been watching closely to see whether the tech giant may be pouring too much money into artificial intelligence and whether AI-generated summaries of search results will translate into fewer opportunities to serve up money-making ads. The internet giant is dabbling with ads in its new AI Mode for online search, a strategic move to fend off competition from ChatGPT while adapting its advertising business for an AI age. The integration of advertising has been a key question accompanying the rise of generative AI chatbots, which have largely avoided interrupting the user experience with marketing messages. However, advertising remains Google's financial bedrock. "Google is doing well despite tariff headwinds and rising AI competition in search," said Emarketer senior analyst Evelyn Mitchell-Wolf. "It's also successfully monetizing AI Overviews and AI Mode, a good sign for the future." Google and rivals are spending billions of dollars on data centers and more for AI, while the rise of lower-cost model DeepSeek from China raises questions about how much needs to be spent. Antitrust battles Meanwhile the online ad business that generates the cash Google invests in its future could be neutered due to a defeat in a US antitrust case. During the summer of 2024, Google was found guilty of illegal practices to establish and maintain its monopoly in online search by a federal judge in Washington. The Justice Department is now demanding remedies that could transform the digital landscape: Google's divestiture from its Chrome browser and a ban on entering exclusivity agreements with smartphone manufacturers to install the search engine by default. District Judge Amit Mehta is considering "remedies" in a decision expected in the coming days or weeks. In another legal battle, a different US judge ruled this year that Google wielded monopoly power in the online ad technology market, another legal blow that could rattle the tech giant's revenue engine. District Court Judge Leonie Brinkema ruled that Google built an illegal monopoly over ad software and tools used by publishers. Combined, the courtroom defeats have the potential to leave Google split up and its influence curbed. Google said it is appealing both rulings.

Alphabet beats earnings expectations, raises spending forecast

Sundar Pichai, chief executive officer of Alphabet Inc., in San Francisco last month. David Paul Morris / Bloomberg via Getty Images Alphabet reported second-quarter results on Wednesday that beat on revenue and earnings, but the company said it would raise its capital investments by $10 billion in 2025. Here's how the company did, compared with estimates from analysts polled by LSEG: Wall Street is also watching several other numbers in the report: The company's overall revenue grew 14% year over year, higher than the 10.9% Wall Street expected, but Alphabet is going to spend more on artificial intelligence in 2025 than it anticipated. In February, the company said it expected to invest $75 billion in capital expenditures in 2025 as it continues to expand on its AI strategy. That was already above the $58.84 billion Wall Street expected at the time. The company increased that figure on Wednesday to $85 billion, saying it was raising it due to "strong and growing demand for our Cloud products and services." The company expects to further increase capital expenditures in 2026, Alphabet finance chief Anat Ashkenazi said on an earnings call. The company reported revenue of $13.62 billion for its cloud computing business, which is a 32% increase from a year ago. Last week, OpenAI announced that it expected to use Google's cloud infrastructure for its popular ChatGPT service. Alphabet CEO Sundar Pichai said "we are very excited to be partnering with them." Alphabet's net income increased to $28.20 billion, up nearly 20% from the previous year. The company's search and advertising units still showed growth in the second quarter despite AI competition heating up. The company's search unit brought in $54.19 billion during the quarter, and its advertising revenue grew to $71.34 billion -- up about 10.4% from $64.61 billion the year prior. YouTube advertising revenue came in at $9.8 billion, higher than Wall Street expected. The company said its "Other Bets" segment, which includes its self-driving car unit Waymo and life sciences unit Verily, brought in $373 million -- up from $365 million a year ago. Other Bets reported a loss of $1.25 billion, up from the $1.13 billion a year ago. AI Overviews, Google's AI search product that summarizes search results, now has upward of two billion monthly users across more than 200 countries and territories, Pichai said during Wednesday's earnings call. That's up from 1.5 billion monthly users last quarter. The Gemini app, which has the company's AI chatbot, now has more than 450 million monthly active users, Pichai said. When asked about large spending on AI talent, Ashkenazi said Alphabet makes "sure that we invest appropriately to have the best and brightest minds in the industry." Google made a splash in the AI talent wars, announcing earlier in July that it would bring in Windsurf CEO Varun Mohan and other top researchers at the AI coding startup as part of a $2.4 billion deal that also includes licensing the company's technology. Total operating expenses increased 20% to $26.1 billion, Ashkenazi said on Wednesday. The biggest driver of growth was expenses for legal and other matters due in part to a $1.4 billion charge related to a settlement, she said on Wednesday's earnings call. Texas Attorney General Ken Paxton in May announced a $1.37 billion settlement with Google related to a data privacy rights lawsuit it made against the company in 2022. Ashkenazi said Alphabet's third-quarter revenue "could see a tailwind" due to several reasons. That includes a negative impact for advertising, which benefited from "strong spend on U.S. elections" in late 2024, particularly on YouTube, she said.

Alphabet beats Wall Street's targets on earnings and revenue, but investors worry about increased AI spending - SiliconANGLE

Alphabet beats Wall Street's targets on earnings and revenue, but investors worry about increased AI spending Google LLC's parent company Alphabet Inc. reported second-quarter earnings and revenue that surpassed expectations, but surprised investors when it said it's going to increase its capital investments in fiscal 2025 by another $10 billion. The company reported earnings before certain costs such as stock compensation of $2.31 per share, surpassing the $2.18 estimate from analysts. Meanwhile, revenue increased 14% from a year earlier to $96.43 billion, ahead of the Street's $94 billion target. That meant Alphabet posted a total income of $28.2 billion in the quarter, up 20% from the same period last year. Alphabet's stock initially rose more than 3% in after-hours on the report, only to quickly reverse most of those gains when investors became aware of its increased spending plans. The company told analysts that its investments in artificial intelligence this year are going to cost more than first anticipated, and consequently bumped up its annual capital expenditures forecast to $85 billion, up from $75 billion earlier. Originally, Alphabet executives said in February that the company anticipated spending $75 billion in capex this year, but it turns out that's not going to be enough. In a conference call with analysts, Alphabet Chief Financial Officer Anat Ashkenazi said the increase is due to "strong and growing demand for our cloud products and services. She added that there will likely be additional new expenditures in fiscal 2026, but didn't put a number on those increases. One analyst asked Ashkenazi about Alphabet's increased spending on AI talent, which has risen to billions of dollars this year. In the most recent example, earlier this month, the company said it would bring aboard Windsurf Chief Executive Varun Mohan and other leading researchers from the AI coding startup after spending $2.4 billion on a technology licensing deal. "We make sure that we invest appropriately to have the best and brightest minds in the industry," Ashkenazi said. As to when such investments will pay off remains unclear, but Alphabet CEO Sundar Pichai (pictured) said on the call that AI Overviews, the company's search engine bot that summarizes user's search results, now has more than two billion users across over 200 countries and territories, up from 1.5 billion users at the end of the previous quarter. Meanwhile, the Gemini app that provides access to Google's large language model-based chatbot, now counts more than 450 million active users, Pichai added. The addition of AI Overviews to Google Search may be one reason why that business continues to show strength. It brought in more than $54.19 billion in revenue during the quarter, representing a good chunk of its overall $71.34 billion in advertising revenue. That was up 10.5% from $64.61 billion in ad sales in the same period last year. The company also reported YouTube ad revenue of $9.8 billion, coming in slightly higher than Wall Street's estimates. As for Google Cloud, the fast growing cloud infrastructure business, revenue there hit $13.62 billion in the quarter, up 31% from a year earlier. Last week, the business received a major boost when OpenAI said it's going to start using Google Cloud's infrastructure resources to support ChatGPT. "We're very excited to be partnering with them," was all Pichai would say about the deal today. Forrester Research Inc. analyst Lee Sustar told SiliconANGLE that Google Cloud's growth in the last few years has been compelling, and what was once seen as just a sideline beset with enormous losses has been transformed into an increasingly significant earner. "AI is a big reason, but not the only reason for this gain," he said. "Google Cloud has systematically built out wide enterprise compute capacity beyond its signature data, analytics and AI offerings." The analyst also pointed to Google Cloud's operating margin, which doubled to around 20% in the quarter and shows that the business can grow without burning up all of the revenue it generates in its vast AI investments. "The era of AI-native cloud is here and it's showing up in Google Cloud's numbers," Sustar said. As for Alphabet's Other Bets segment, which includes the self-driving car unit Waymo, the life sciences business Verily and other experimental products and services, that generated $373 million in revenue, up slightly from a year earlier when it reached $365 million in sales. It's still hugely unprofitable though, with its net loss coming to $1.25 billion, up from $1.13 billion a year ago. Alphabet's total operating expenses rose 20% from a year earlier to $26.1 billion. According to Ashkenazi, this was partly due to the company's increased legal expenses, which included a $1.4 billion charge relating to a settlement with Texas Attorney General Ken Paxton that was finalized in May, relating to a data privacy rights lawsuit dating back to 2022. The company didn't offer guidance for the current quarter, but Ashkenazi told analysts that the company could see some tailwinds as a result of several factors, including a negative impact on YouTube ad revenue, following "strong spending on U.S. elections" last year. Investing.com senior analyst Jesse Cohen said investor sentiment on Alphabet seems mixed in the wake of the report, likely due to the big increase in its capex forecast. On the one hand, it demonstrates a commitment to maintaining a competitive edge in AI, but on the other hand it creates concerns over the company's near-term profitability, he explained. "The market is questioning the pace of monetization, and the ROI may initially weigh on short-term margins," Cohen said. "But we expect the investments to enhance Google's product offerings and operational efficiencies within two-to-four years. Balancing these investments with effective execution and innovation will be essential for achieving a favorable ROI while maintaining investor confidence."

Google Cloud turns in 32% annual growth as Alphabet's reports a stellar Q2

Profit up 19%, Google Cloud growth of 32% year-on-year, and an AI spending spree that continues unabated - the highlights from Alphabet's latest earnings showed Google's parent on top form. Total revenues came in at $81.7 billion, up 15% year-on-year. Google Cloud turned in $13.6 billion, equating to annualized revenues of over $50 billion. Pichai said: We see strong customer demand, driven by our product differentiation and our comprehensive AI product portfolio. Four stats show this. One, the number of deals over $250 million, doubling year-over-year; two, in the first half of 2025, we signed the same number of deals over $1 billion that we did in all of 2024. Three, the number of new GCP customers increased by nearly 28% quarter-over-quarter; four, more than 85,000 enterprises, including LVMH, Salesforce and Singapore's DBS Bank now build with Gemini, driving a 35x growth in Gemini usage year-over-year. All of this costs, of course. CapEx is estimated to run at $85 billion, a large chunk of which will inevitably be going on AI. Pichai explained: On the CapEx stuff, obviously, we are seeing strong momentum across our portfolio and especially in cloud. You are right. It's a tight supply environment. And we are investing more to expand, but there is obviously a time delay between this additional investment will play out in future years. And so that's why both of them are true at the same time. We are planning ahead, and we are investing. But overall, it's exciting to see the traction, particularly in cloud. I think the comprehensiveness of our AI portfolio breadth of our offerings, both providing our models on GPUs and TPUs for our customers. All of that has been really driving demand. And so we are investing to match up to it. He added: We are definitely investing because we are delivering a lot of value through our cloud offerings. And I think it's important to understand as we build more and more of an installed base with Google Cloud. We have very high customer satisfaction. Our churn rates are very low, and we are much more efficient in the investments needed to grow those lines of businesses. So you're seeing all that play out in our margin trajectory, particularly if you look at it annually sequentially over the past few years. And so all that gives us confidence as we are investing in this, we'll be able to have a healthy ROI on our investments. And particularly in this AI moment, the value we are delivering to the customers is also growing pretty significantly on a forward-looking basis. On AI, Pichai said: We are seeing significant demand for our comprehensive AI product portfolio. Of course, this is all possible because of the long-term investments we have made in our differentiated full stack approach to AI. This spans AI infrastructure, world-class research, models and tooling and our products and platforms that brings AI to people all over the world. We operate the leading global network of AI-optimized data centers and cloud regions. We also offer the industry's widest range of TPUs and GPUs along with storage and software built on top. That's why nearly all GenAI unicorns use Google Cloud. And that's why a growing number, including leading AI research labs like Safe Superintelligence and Physical Intelligence use TPU specifically. Our AI infrastructure investments are crucial to meeting the growth in demand from cloud customers. The Gemini app now has more than 450 million monthly active users, he added:

Alphabet's Q2 revenue beats estimates as cloud computing surges

The search giant beat estimates for quarterly revenue and profit on the back of new AI features and a steady digital advertising market. Google Cloud's revenue growth surged nearly 32%, well above estimates for a 26.5% increase. "With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures," CEO Sundar Pichai said in an earnings release. Shares of the company, which have risen more than 18% since its previous earnings report in April, were down 1% in extended trading.

Google's AI push pays off with solid second quarter, but doubts about company's future persist

SAN FRANCISCO (AP) -- Google's accelerating shift into artificial intelligence helped propel its corporate parent to another quarter of solid growth while a crackdown on its internet empire looms in the background. The results released Wednesday for the April-June period provided the latest sign that Google is deftly navigating the technological landscape's tilt toward AI while still capitalizing on well-worn techniques that have made it the internet's main gateway for the past quarter century. That balancing act helped Google parent Alphabet Inc. earn $28.2 billion, or $2.31 per share, during the second quarter, a 19% increase from the same time last year. Revenue climbed 14% from a year ago to $96.4 billion. Both figures easily eclipsed analysts' projections. "We had a standout quarter, with robust growth across the company," Alphabet CEO Sundar Pichai said. "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." The numbers were initially overshadowed by a disclosure that Alphabet is increasing this year's budget for capital expenditures by $10 billion to $85 billion as part of its effort to fend off intensifying competition from AI startups such as OpenAI's ChatGPT and Perplexity. Besides those threats, a federal judge who declared Google's search engine to be an illegal monopoly is now weighing a range of countermeasures that include requiring the sale of its popular Chrome browser. Alphabet's shares dipped 1% in extended trading after the quarterly report came out. After initially dipping following the disclosure about the rising costs of AI, Alphabet's stock price rebounded and rose by more than 1% in extended trading. The performance covered a stretch that saw Google bring even more AI technology into its search engine in an effort to maintain its dominance, including the May release of its own version of a conversational answer engine called AI Mode. That addition supplemented its more than year-old use of extensive summaries called AI Overviews that Google now frequently highlights at the top of its results page while decreasing the number of its traditional links to other websites. The shake-up has resulted in even more interaction with Google's search engine and steady earnings growth to support Alphabet's $2.3 trillion market value, said Jim Yu, chief executive of BrightEdge, a firm that analyzes search trends. Google's search-driven ad revenue totaled $54.2 billion in the past quarter, a 12% increase from the same time last year. "All this AI stuff is not slowing Google down, they are doing a very good job of evolving with the times," Yu said. The AI boom has also been fueling demand in Google's Cloud division that sells computing power and other services. Google Cloud continued to thrive in the past quarter with revenue rising 32% from a year ago to $13.6 billion. The division is under pressure to deliver robust growth from investors to help justify Google's huge investments in AI technology.

Google's AI push pays off with solid second quarter, but doubts about company's future persist

SAN FRANCISCO -- Google's accelerating shift into artificial intelligence helped propel its corporate parent to another quarter of solid growth while a crackdown on its internet empire looms in the background. The results released Wednesday for the April-June period provided the latest sign that Google is deftly navigating the technological landscape's tilt toward AI while still capitalizing on well-worn techniques that have made it the internet's main gateway for the past quarter century. That balancing act helped Google parent Alphabet Inc. earn $28.2 billion, or $2.31 per share, during the second quarter, a 19% increase from the same time last year. Revenue climbed 14% from a year ago to $96.4 billion. Both figures easily eclipsed analysts' projections. "We had a standout quarter, with robust growth across the company," Alphabet CEO Sundar Pichai said. "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." The numbers were initially overshadowed by a disclosure that Alphabet is increasing this year's budget for capital expenditures by $10 billion to $85 billion as part of its effort to fend off intensifying competition from AI startups such as OpenAI's ChatGPT and Perplexity. Besides those threats, a federal judge who declared Google's search engine to be an illegal monopoly is now weighing a range of countermeasures that include requiring the sale of its popular Chrome browser. Alphabet's shares dipped 1% in extended trading after the quarterly report came out. After initially dipping following the disclosure about the rising costs of AI, Alphabet's stock price rebounded and rose by more than 1% in extended trading. The performance covered a stretch that saw Google bring even more AI technology into its search engine in an effort to maintain its dominance, including the May release of its own version of a conversational answer engine called AI Mode. That addition supplemented its more than year-old use of extensive summaries called AI Overviews that Google now frequently highlights at the top of its results page while decreasing the number of its traditional links to other websites. The shake-up has resulted in even more interaction with Google's search engine and steady earnings growth to support Alphabet's $2.3 trillion market value, said Jim Yu, chief executive of BrightEdge, a firm that analyzes search trends. Google's search-driven ad revenue totaled $54.2 billion in the past quarter, a 12% increase from the same time last year. "All this AI stuff is not slowing Google down, they are doing a very good job of evolving with the times," Yu said. The AI boom has also been fueling demand in Google's Cloud division that sells computing power and other services. Google Cloud continued to thrive in the past quarter with revenue rising 32% from a year ago to $13.6 billion. The division is under pressure to deliver robust growth from investors to help justify Google's huge investments in AI technology.

Google's AI Push Pays off With Solid Second Quarter, but Doubts About Company's Future Persist

SAN FRANCISCO (AP) -- Google's accelerating shift into artificial intelligence helped propel its corporate parent to another quarter of solid growth while a crackdown on its internet empire looms in the background. The results released Wednesday for the April-June period provided the latest sign that Google is deftly navigating the technological landscape's tilt toward AI while still capitalizing on well-worn techniques that have made it the internet's main gateway for the past quarter century. That balancing act helped Google parent Alphabet Inc. earn $28.2 billion, or $2.31 per share, during the second quarter, a 19% increase from the same time last year. Revenue climbed 14% from a year ago to $96.4 billion. Both figures easily eclipsed analysts' projections. "We had a standout quarter, with robust growth across the company," Alphabet CEO Sundar Pichai said. "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." The numbers were initially overshadowed by a disclosure that Alphabet is increasing this year's budget for capital expenditures by $10 billion to $85 billion as part of its effort to fend off intensifying competition from AI startups such as OpenAI's ChatGPT and Perplexity. Besides those threats, a federal judge who declared Google's search engine to be an illegal monopoly is now weighing a range of countermeasures that include requiring the sale of its popular Chrome browser. Alphabet's shares dipped 1% in extended trading after the quarterly report came out. After initially dipping following the disclosure about the rising costs of AI, Alphabet's stock price rebounded and rose by more than 1% in extended trading. The performance covered a stretch that saw Google bring even more AI technology into its search engine in an effort to maintain its dominance, including the May release of its own version of a conversational answer engine called AI Mode. That addition supplemented its more than year-old use of extensive summaries called AI Overviews that Google now frequently highlights at the top of its results page while decreasing the number of its traditional links to other websites. The shake-up has resulted in even more interaction with Google's search engine and steady earnings growth to support Alphabet's $2.3 trillion market value, said Jim Yu, chief executive of BrightEdge, a firm that analyzes search trends. Google's search-driven ad revenue totaled $54.2 billion in the past quarter, a 12% increase from the same time last year. "All this AI stuff is not slowing Google down, they are doing a very good job of evolving with the times," Yu said. The AI boom has also been fueling demand in Google's Cloud division that sells computing power and other services. Google Cloud continued to thrive in the past quarter with revenue rising 32% from a year ago to $13.6 billion. The division is under pressure to deliver robust growth from investors to help justify Google's huge investments in AI technology.

Alphabet Will Seek to Reassure Investors as AI Rivals Step up Competition

By Deborah Mary Sophia and Zaheer Kachwala (Reuters) -Alphabet, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a new AI-only mode to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. THE CONTEXT Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total $320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. THE FUNDAMENTALS ** Alphabet is expected to report a near 11% jump in total revenue for the second quarter, per LSEG data. ** Analysts expect a 7.5% rise in advertising revenue and a 26.2% jump in its cloud computing segment. ** Per-share earnings are expected to be around $2.18, excluding one-off items. WALL STREET SENTIMENT ** Alphabet shares are largely flat so far this year. ** Stock is among the laggards in the "Magnificent Seven" group of megacap stocks, with Nvidia leading the range with a 28% jump and Tesla at the bottom with a 19% decline. ** Alphabet is rated "buy" on average among 55 brokerages, with a median price target of $203.84. (Reporting by Deborah Sophia and Zaheer Kachwala in BengaluruEditing by Rod Nickel)

What Google Parent Alphabet's AI Spending Boost Says About Big Tech Earnings Next Week

Google expanding its access to compute power is a good sign for AWS, which is working to do the same, JPMorgan said. Google parent Alphabet (GOOGL) said it plans to spend $10 billion more in capital expenditures this year than previously anticipated as the company works to meet surging demand for Google Cloud. Other Big Tech firms could follow its lead when they report next week, JPMorgan analysts said. Alphabet told investors Wednesday that it now expects capex of $85 billion in 2025, up from $75 billion, which CFO Anat Ashkenazi attributed to robust demand for Google Cloud. The additional spend reflects more investment in servers and the building of AI data centers, Ashkenazi said on a call with analysts. JPMorgan expects the increase "to foreshadow similar trends in spending appetite from the remainder of the U.S. hyperscaler cohort." Microsoft (MSFT) and Meta (META) are slated to report results on Wednesday, with Amazon (AMZN) and Apple (AAPL) to follow a day later. Google expanding its access to compute power could be a good sign for hyperscalers like Amazon Web Services looking to do the same, JPMorgan said. More servers and data centers coming online "suggests that AWS is likely [also] seeing easing supply constraints," the analysts said. Amazon earlier this year said it expects to spend more than $100 billion in capex in 2025, the "vast majority" of which would go toward AI for Amazon Web Services, according to CEO Andy Jassy. Meta meanwhile has said it expects capex of $64 billion to $72 billion to grow its AI capacity this year, while Microsoft reaffirmed a plan to spend $80 billion when the two tech titans last reported quarterly results in April. Shares of Alphabet rose about 1% in recent trading Thursday to above $194. JPMorgan raised its price target for the stock to $232 from $200, a bit ahead of the mean of analysts surveyed by Visible Alpha near $217.

Google Parent Alphabet Tops Expectations on Cloud, Search Growth

Google parent Alphabet (GOOGL) reported second-quarter revenue and profit that beat analysts' expectations, driven by rising cloud and search sales. The tech titan's revenue grew 14% year-over-year to $96.43 billion, above the Visible Alpha analyst consensus, from $84.74 billion. Net income rose to $28.2 billion, or $2.31 per share, from $23.62 billion, or $1.89 per share, a year earlier. Google Cloud revenue jumped 32% to $13.62 billion, while its Search and Other revenue grew 12% to $54.19 billion. Both landed above Wall Street estimates. "AI is positively impacting every part of the business, driving strong momentum," CEO Sundar Pichai said in a press release. He pointed to the performance of features like Google's AI Mode, which launched in May. Alphabet's Class A shares declined more than 1% in after-hours trading. The stock was up about 1% for 2025 through Wednesday's close after finishing the day little changed. Read Investopedia's full coverage of today's trading here.

Alphabet Stock Rises on Strong Results, Boosted Capital Spending

The company's Class A shares, which entered Thursday about flat for the year, jumped close to 4% before paring back some of their early gains. Some analysts turned more positive on the stock after Alphabet's results. Citi analysts raised their price target to $225 from $203 -- Wall Street's average is above $216, according to Visible Alpha -- citing the company's "improving Search monetization trends." Investors have been concerned that Google's search business, a core revenue generator, was under threat from the rise of AI. "To be clear, the broader search market continues to evolve and remains among the most competitive ever as debate on the future of Search continues," the Citi analysts wrote. The analysts named a list of things they said impressed them from Alphabet's results, including consumers' increasing adoption of Google's large language model Gemini and the expansion of AI Mode, which integrates an AI chatbot tool into search. CEO Sundar Pichai said on the earnings call late Wednesday that AI Mode had reached 100 million monthly active users in the U.S. and India since it was launched in May. The analysts also said they liked the company's "faster product cycle," accelerating revenue from cloud operations and the growing demand for its products that led to its plan to spend $85 billion on developing AI this year, up from an earlier target.

Alphabet will seek to reassure investors as AI rivals step up competition - The Economic Times

Alphabet is working to strengthen its search and advertising businesses amid competition from AI startups. Rivals like OpenAI and Perplexity are challenging Google's dominance. Alphabet is integrating AI into Google Search and securing deals like having OpenAI as a cloud customer. Wall Street anticipates returns from Big Tech's AI investments.Alphabet, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a new AI-only mode to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. The context Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total $320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. The fundamentals Wall Street sentiment

Alphabet tops Q2 estimates with 14 percent revenue jump as AI ambitions and legal challenges define future

Alphabet Inc., the parent company of Google, reported better-than-expected second-quarter earnings on Wednesday(July 23), with revenue rising 14 percent to $96.4 billion and earnings per share increasing 22 percent to $2.31. Wall Street had projected $93.98 billion in revenue and earnings of $2.20 per share. "AI is positively impacting every part of the business, driving strong momentum," CEO Sundar Pichai said in a statement. The company highlighted growth in its advertising and cloud businesses, as well as the rollout of new AI tools. Google Cloud posted strong growth, with revenue up 32 percent to $13.6 billion. Search and other advertising generated $54.2 billion, a 12 percent increase from last year. YouTube ads brought in $9.8 billion. Despite the upbeat earnings, Alphabet shares remained mostly flat after the announcement. One reason is that the company said it would increase capital expenditures by $10 billion, bringing the full-year total to $85 billion. The funds will go toward expanding AI infrastructure and data centers. Earlier this year, Alphabet shares had fallen as much as 25 percent over concerns about the company's position in the growing AI market. Google's dominance in online search, its biggest revenue driver, is being challenged by AI-powered platforms like OpenAI's ChatGPT. Analysts estimate ChatGPT handles 15-20 percent of Google's daily search volume. In response, Google has accelerated AI development. It recently launched AI Mode in Search, a chatbot-like interface similar to ChatGPT, and expanded AI Overviews to over 2 billion monthly users. These features aim to keep users within Google's ecosystem while adapting to the shift in how people seek information. Still, competition is intensifying. Gene Munster of Deepwater Asset Management said in a note that Google is working hard to send one clear message: "AI is a tailwind for search, not a headwind." The strong quarter comes as Alphabet faces legal pressure. A federal judge in Washington, DC, recently ruled that Google violated antitrust laws. A decision on potential remedies, including a proposed breakup of parts of Google's business, is expected before Labor Day.

Alphabet jumps as AI-driven spending fuels cloud revenue surge - The Economic Times

Alphabet shares rose nearly 3% before the bell on Thursday as the Google parent's earnings underscored a key message to investors: AI spending is climbing, but so are the returns. The tech giant has raised its 2025 capital spending forecast by $10 billion to $85 billion and signaled even higher outlay next year, stepping up efforts to meet soaring cloud demand and stay competitive in Silicon Valley's escalating AI race. Its cloud-computing unit delivered an almost 32% jump in second-quarter revenue, surpassing expectations, as investments in in-house chips and the Gemini AI model began to pay off. The results bode well for rivals Microsoft and Amazon.com, both of which have been stepping up data center investments and operate larger cloud businesses. "Google came back fighting this quarter," said Bernstein analyst Mark Shmulik. "Investors have long been clamoring for Google to get more 'aggressive' in the AI race," he added. An early AI pioneer with its invention of the Transformer model - the foundation of most modern generative AI - Google appeared to fall behind OpenAI and Microsoft last year. But it has rebounded this year, with AI Mode reaching 100 million monthly users just two months into its wider rollout, and Gemini surpassing 450 million monthly users. Its ad business, which accounts for about three-quarters of its sales, also continues to fare well in the face of economic uncertainty wrought by tariffs and geopolitical tensions. Revenue in the business a rose better-than-expected 10.4%, a positive sign for rivals such as Meta and Snap that rely on digital ads for most of their revenue. At least 17 brokerages raised their price targets on Google stock after the results, taking the median target to $210. Still, some analysts warned the higher spending may draw fresh scrutiny from investors, who have largely stayed on the sidelines this year. Alphabet shares are up just 0.5% in 2025, trailing Microsoft's 20% increase and 21% rise in Meta stock, also held back by regulatory battles that are looking to break its illegal monopoly in the search and the ad-tech market. Alphabet's 12-month forward price-to-earnings ratio stands at 18.88, trailing Microsoft's 33.03 and Amazon's 33.31, according to data compiled by LSEG. "On paper, it has all the right tools to lead in AI - cutting-edge models and massive distribution," said Matt Britzman, senior equity analyst, Hargreaves Lansdown. "That said, until there's more confidence AI integration won't cannibalise core search revenue, and some clarity around ongoing legal battles, there's enough uncertainty to cap near-term upside."

Alphabet shares jump 3% as AI-driven spending fuels cloud revenue surge

Alphabet shares rose more than 3% in early trading on Thursday as the Google parent's earnings underscored a key message to investors: AI spending is climbing, but so are the returns. Alphabet shares rose more than 3% in early trading on Thursday as the Google parent's earnings underscored a key message to investors: AI spending is climbing, but so are the returns. The tech giant has raised its 2025 capital spending forecast by $10 billion to $85 billion and signaled even higher outlay next year, stepping up efforts to meet soaring cloud demand and stay competitive in Silicon Valley's escalating AI race. Its cloud-computing unit delivered an almost 32% jump in second-quarter revenue, surpassing expectations, as investments in in-house chips and the Gemini AI model began to pay off. The results bode well for rivals Microsoft and Amazon.com, both of which have been stepping up data center investments and operate larger cloud businesses. "Google came back fighting this quarter," said Bernstein analyst Mark Shmulik. "Investors have long been clamoring for Google to get more 'aggressive' in the AI race," he added. An early AI pioneer with its invention of the Transformer model - the foundation of most modern generative AI - Google appeared to fall behind OpenAI and Microsoft last year. But it has rebounded this year, with AI Mode reaching 100 million monthly users just two months into its wider rollout, and Gemini surpassing 450 million monthly users. Its ad business, which accounts for about three-quarters of its sales, also continues to fare well in the face of economic uncertainty wrought by tariffs and geopolitical tensions. Revenue in the business rose a better-than-expected 10.4%, a positive sign for rivals such as Meta and Snap that rely on digital ads for most of their revenue. At least 27 brokerages raised their price targets on Google stock after the results, taking the median target to $220 from $200 a month earlier. Still, some analysts warned the higher spending may draw fresh scrutiny from investors, who have largely stayed on the sidelines this year. Alphabet shares are up just 0.5% in 2025, trailing Microsoft's 20% increase and a 22% rise in Meta stock, also held back by regulatory battles that are looking to break its illegal monopoly in the search and the ad-tech markets. Alphabet's 12-month forward price-to-earnings ratio stands at 18.88, trailing Microsoft's 33.03 and Amazon's 33.31, according to data compiled by LSEG. "On paper, it has all the right tools to lead in AI - cutting-edge models and massive distribution," said Matt Britzman, senior equity analyst at Hargreaves Lansdown. "That said, until there's more confidence AI integration won't cannibalise core search revenue, and some clarity around ongoing legal battles, there's enough uncertainty to cap near-term upside."

Google parent Alphabet surprises with capital spending boost after earnings beat

Alphabet saw a surge in cloud computing demand. The company is increasing its capital spending. This is to about $85 billion. Alphabet beat Wall Street estimates for revenue and profit. Google Cloud sales grew significantly. AI features and a steady digital ad market helped. The company's shares initially dipped but then rallied. This was due to strong cloud demand details. Alphabet on Wednesday cited massive demand for its cloud computing services as it hiked its capital spending plans for the year to about $85 billion and predicted a further increase next year. The search giant strongly beat Wall Street estimates for quarterly revenue and profit on the back of new AI features and a steady digital advertising market. Revenue growth was driven by Google Cloud's sales, which surged nearly 32%, well above estimates for a 26.5% increase. "With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures." CEO Sundar Pichai said in an earnings release. Shares of the company, which have risen more than 18% since its previous earnings report in April, dipped initially in extended trading after the report before rallying as executives shared details about strong cloud demand on a call with analysts. But investors were surprised by the planned capital spending increase. "I don't think anyone was expecting a change to that 2025 capex guide," said Dave Wagner, portfolio manager at Aptus Capital Advisors. "Google had an amazing quarter. It was an easy beat, and it was just offset by this $10-billion increase in capex." Capital spending is expected to increase further in 2026 due to demand and growth opportunities, Chief Financial Officer Anat Ashkenazi said on the call. Ashkenazi added that while the pace of server deployment has improved, Alphabet continues to face more customer demand for its cloud services than it can supply. Google had earlier pledged about $75 billion in capital spending this year, part of the more than $320 billion that Big Tech is expected to pour into building AI capabilities. The rise of artificial intelligence technologies has propelled demand for cloud computing services. Google Cloud still trails Amazon's AWS and Microsoft's Azure in total sales, but has tried to gain ground by touting AI offerings, including its in-house TPU chips that rival Nvidia's GPUs. The business segment grew its quarter-over-quarter customer count by 28%, Pichai said on the call. "The comprehensiveness of our AI portfolio, the breadth of our offerings, both providing our models on GPUs and TPUs for our customers, all of that has been really driving demand," he said. In a huge win for Alphabet, ChatGPT maker OpenAI recently added Google Cloud to its list of cloud capacity suppliers, as Reuters exclusively reported in June, in a surprising collaboration between two companies that are competing head-to-head in AI. It also marked OpenAI's latest move to diversify beyond its major backer Microsoft. The capex increase nevertheless raises concerns about Alphabet's pace of monetization and its impact on near-term profitability, Investing.com senior analyst Jesse Cohen said. Alphabet and its peers have defended their aggressive AI spending amid rising competition from Chinese rivals and investor frustration with slower-than-expected payoffs, saying those massive investments are necessary to fuel growth and improve their products. Google Search's artificial intelligence features such as AI Overviews and AI Mode are also helping the company boost engagement and tackle rising competition from chatbots such as ChatGPT that have surged in popularity. AI Mode has grown to 100 million monthly active users just two months after Google announced the start of its large-scale rollout during its annual developer conference. Google's own ChatGPT competitor, called Gemini, has more than 450 million monthly users, Pichai said. Google's advertising revenue, which represents about three-quarters of the tech major's overall sales, rose 10.4% to $71.34 billion in the second quarter, beating expectations for $69.47 billion, according to data from LSEG. "Hopefully, this will damper concerns by the investment community that has been worried that products like OpenAI/ChatGPT could be having an impact on Google's Search query growth," said Dan Morgan, senior portfolio manager at Synovus Trust. Alphabet reported total revenue of $96.43 billion for the second quarter ended June 30, compared with analysts' average estimate of about $94 billion, according to data compiled by LSEG. The company reported profit of $2.31 per share for the period, beating estimates of $2.18 per share, according to LSEG data.

Google's AI push pays off with solid second quarter, but doubts about company's future persist - The Economic Times

Alphabet reported strong Q2 growth, with profits up 19% to £21.8bn, driven by AI advancements across Google's services. However, rising capital spending and looming US antitrust rulings cloud its future. Despite competition and regulatory threats, Google's AI-powered search and cloud businesses continue to fuel revenue and market resilience.Google's accelerating shift into artificial intelligence helped propel its corporate parent to another quarter of solid growth while a crackdown on its internet empire looms in the background. The results released Wednesday for the April-June period provided the latest sign that Google is deftly navigating the technological landscape's tilt toward AI while still capitalizing on well-worn techniques that have made it the internet's main gateway for the past quarter century. That balancing act helped Google parent Alphabet Inc. earn $28.2 billion, or $2.31 per share, during the second quarter, a 19% increase from the same time last year. Revenue climbed 14% from a year ago to $96.4 billion. Both figures easily eclipsed analysts' projections. "We had a standout quarter, with robust growth across the company. We are at the leading frontier of AI," Alphabet CEO Sundar Pichai boasted. But Google's aggressive push into AI is forcing Alphabet to dig even deeper into its coffers to pay for the data centers, chips and other components required to power the technology, prompting the Mountain View, California, company to raise its budget for capital expenditures by an additional $10 billion to $85 billion. That spending increase disclosed in the quarterly report initially spooked investors, causing Alphabet's stock to dip in Wednesday's extended trading, despite the financial gains that appear to be flowing from the AI investments. But as Alphabet executives elaborated on Google's AI progress and made other reassuring remarks during a Wednesday conference call, the stock price reversed course and rose by more than 2% in extended trading. Google is upping the ante as part of its effort to fend off intensifying competition from AI startups such as OpenAI's ChatGPT and Perplexity. Besides those threats, a federal judge who declared Google's search engine to be an illegal monopoly is now weighing a range of countermeasures that include requiring the sale of its popular Chrome browser. The performance covered a stretch that saw Google bring even more AI technology into its search engine in an effort to maintain its dominance, including the May release of its own version of a conversational answer engine called AI Mode. That addition supplemented its more than year-old use of extensive summaries called AI Overviews that Google now frequently highlights at the top of its results page while decreasing the number of its traditional links to other websites. The shake-up has resulted in even more interaction with Google's search engine and steady earnings growth to support Alphabet's $2.3 trillion market value, said Jim Yu, chief executive of BrightEdge, a firm that analyses search trends. Google's search-driven ad revenue totalled $54.2 billion in the past quarter, a 12% increase from the same time last year. "All this AI stuff is not slowing Google down, they are doing a very good job of evolving with the times," Yu said. The AI boom has also been fuelling demand in Google's Cloud division that sells computing power and other services. Google Cloud continued to thrive in the past quarter with revenue rising 32% from a year ago to $13.6 billion. The division is under pressure to deliver robust growth from investors to help justify Google's huge investments in AI technology. While Google seems to be making a relatively smooth albeit expensive transition into the AI age, it still could be jolted by the denouement of an antitrust case brought by the U.S. Justice Department nearly five years ago. Besides considering a possible breakup of Google, U.S. District Judge Amit Mehta is also considering whether to ban the deals that Google has been making for years to lock itself in as the go-to search engine on smartphones and personal computers in addition to forcing it to share much of the data that it has accumulated about people's queries with its rivals. The judge has indicated he will issue a ruling before Labour Day. Although Google plans to launch an appeal after Mehta's ruling, the cloud of uncertainty has weighed on Alphabet's stock while other tech giants betting big on AI such as chip maker Nvidia, Microsoft and Meta Platforms have seen their market values soar. Alphabet's shares ended Wednesday's regular trading session up by less than 50 cents so far this year.

Google-parent Alphabet earnings shine with help of AI - The Economic Times

Alphabet, Google's parent company, reported a £21.8bn profit on £74.6bn revenue, driven by AI advancements across its business. Strong growth in search, YouTube, and cloud boosted results. However, antitrust rulings in the US threaten Google's dominance, with potential break-ups looming. Google is appealing both court decisions.Google-parent Alphabet on Wednesday reported quarterly profits that topped expectations, saying artificial intelligence has boosted every part of its business. Alphabet's second-quarter profit of $28.2 billion -- on $96.4 billion in revenue -- came with word that the tech giant will spend $10 billion more than it previously planned this year on capital expenditures, as it invests to meet growing demand for cloud services. "We had a standout quarter, with robust growth across the company," said Alphabet chief executive Sundar Pichai. "AI is positively impacting every part of the business, driving strong momentum." Revenue from search grew double digits in the quarter, with features such as AI Overviews and the recently launched AI mode "performing well," according to Pichai. Ad revenue at YouTube continues to grow along with the video platform's subscription services, Alphabet reported. Alphabet's cloud computing business is on pace to bring in $50 billion over the course of the year, according to the company. "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," Pichai said. Alphabet shares were up nearly 2 percent in after-market trades that followed the release of the earnings figures. Investors have been watching closely to see whether the tech giant may be pouring too much money into artificial intelligence and whether AI-generated summaries of search results will translate into fewer opportunities to serve up money-making ads. The internet giant is dabbling with ads in its new AI Mode for online search, a strategic move to fend off competition from ChatGPT while adapting its advertising business for an AI age. The integration of advertising has been a key question accompanying the rise of generative AI chatbots, which have largely avoided interrupting the user experience with marketing messages. However, advertising remains Google's financial bedrock. "Google is doing well despite tariff headwinds and rising AI competition in search," said eMarketer principal analyst Yory Wurmser. "It's also successfully monetizing AI Overviews and AI Mode, a good sign for the future." Google and rivals are spending billions of dollars on data centers and more for AI, while the rise of lower-cost model DeepSeek from China raises questions about how much needs to be spent. Antitrust battles Meanwhile the online ad business that generates the cash Google invests in its future could be neutered due to a defeat in a US antitrust case. During the summer of 2024, Google was found guilty of illegal practices to establish and maintain its monopoly in online search by a federal judge in Washington. The Justice Department is now demanding remedies that could transform the digital landscape: Google's divestiture from its Chrome browser and a ban on entering exclusivity agreements with smartphone manufacturers to install the search engine by default. District Judge Amit Mehta is considering "remedies" in a decision expected in the coming days or weeks. In another legal battle, a different US judge ruled this year that Google wielded monopoly power in the online ad technology market, another legal blow that could rattle the tech giant's revenue engine. District Court Judge Leonie Brinkema ruled that Google built an illegal monopoly over ad software and tools used by publishers. Combined, the courtroom defeats have the potential to leave Google split up and its influence curbed. Google said it is appealing both rulings.

Alphabet sees net profit rise 19%; says AI Mode 'going well' in India and the US - The Economic Times

Alphabet's Q2 net profit surged 19% to $28.2 billion, fueled by robust growth in Google Cloud and the positive impact of AI across its products. Revenue rose 14% to $96.4 billion, with Google Cloud revenue jumping 32% to $13.62 billion. The company is increasing capital expenditure guidance for 2025 to $85 billion to meet escalating cloud demand.Alphabet, the parent company of Google, has reported a 19% year-on-year increase in its net profit for the April-June quarter to $28.2 billion. The tech giant's robust performance was largely driven by strong growth in its cloud computing division and the accelerating positive impact of artificial intelligence across its product portfolio. "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," CEO Sundar Pichai said in a statement. The company's revenue also rose 14% from a year ago to $96.4 billion, driven by Google Cloud sales. The cloud division emerged as a significant growth engine, with revenue jumping 32% year-over-year to $13.62 billion. Strong demand for Google Cloud Platform (GCP), especially in core products, AI infrastructure, and generative AI solutions, was a key driver. The Cloud backlog also increased 18% sequentially, reaching $106 billion at the quarter end, signalling robust future demand. To meet the escalating demand for its cloud products and services, particularly those fuelled by AI, Alphabet also announced a significant increase in its capital expenditure guidance for 2025. The company now expects to invest approximately $85 billion this year, up from the previous forecast of $75 billion. "Our updated outlook reflects additional investment in servers, the timing of delivery of servers, and an acceleration in the pace of data centre construction, primarily to meet cloud customer demand," Anat Ashkenazi, chief financial officer (CFO) of Alphabet, said on the analyst call. "Looking out to 2026, we expect a further increase in capex due to the demand we're seeing from customers as well as growth opportunities across the company." Google said its AI Mode, which has been launched in the US and India, "is going well". AI Overviews now has over 2 billion monthly users across more than 200 countries and territories, and 40 languages. Pichai highlighted the pivotal role of AI in the company's success. "Our new end-to-end AI search experience, AI Mode, continues to receive very positive feedback, particularly for longer and more complex questions," Pichai said. "It's still rolling out but already has over 100 million monthly active users in the US and India." He said the plan is to keep enhancing the AI Mode experience for users by "shipping great features fast". This includes its advanced research tool, Deep Search, and more personalised responses. When it comes to Google Cloud, Pichai said the company sees strong customer demand driven by Google's product differentiation and comprehensive AI product portfolio. YouTube, Google's video streaming site, reported ad revenue of $9.8 billion during the second quarter. India is among YouTube's largest markets. Alphabet's Other Bets, a collection of futuristic businesses that includes the self-driving-car effort Waymo, generated $373 million in revenue.

Alphabet Set For Solid Q2 Earnings -- But Analysts Warn Of A Growing Threat To Its Core Business - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

Alphabet Inc. GOOGL GOOG is set to release its second-quarter earnings on Tuesday. Analysts anticipate robust results, despite concerns over the impact of AI on the company's core search business. What Happened: Alphabet, along with other Big Tech companies, continues to invest billions in AI development and infrastructure. However, the rise of AI-backed chatbot alternatives poses a significant threat to Alphabet's core search business, according to a report by MarketWatch. Check out the current price of GOOG stock here. Truist analyst Youssef Squali pointed out that despite the concerns, search demand likely remained strong in the second quarter, supported by solid results from YouTube and the company's cloud division. "Concerns over AI evolution in Search (and regulatory pressures to a lesser degree) have weighed on [Alphabet]," stated Squali. However, he added: "we believe that current valuation reflects much of those concerns, and that AI Search remains Google's war to lose." Despite these positive predictions, there are concerns about the long-term impact of AI on Alphabet's search business. More bearish investors, as noted by BofA analysts, suggest that AI-powered chatbots like OpenAI's ChatGPT and Anthropic's Claude provide alternatives to traditional search engines, which "could show up in near-term click results." They also raise questions about Alphabet's future, particularly after losing some antitrust cases and its ability to monetize AI overviews appearing in search results. SEE ALSO: Trump Says He Doesn't Need Scott Bessent's Advice To Fire Jerome Powell: 'I Know Better Than Anybody What's Good For The Market' Trending Investment Opportunities Advertisement Why It Matters: Earlier this month, Alphabet made a strategic move to bolster its AI capabilities. The company finalized a $2.4 billion deal with AI coding startup Windsurf, which included licensing technology and hiring Windsurf's CEO and key employees. This move was seen as a significant step in Alphabet's AI development strategy. Alphabet's investment in AI is also reflected in its efforts to attract top AI talent. The company revamped its pay structure to offer substantial salaries to software engineers, a move aimed at retaining and attracting top-tier AI professionals. Despite several challenges, optimists believe that Google's deep relationships with publishers, its vast first-party data, and the underappreciated businesses outside of search, such as its cloud segment, YouTube, and Waymo, give it an edge over AI platforms. Alphabet offers strong Growth and Quality, with average scores on the Value and Quality metrics as per Benzinga's Proprietary Edge Rankings. Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. GOOGAlphabet Inc $187.420.80% Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock Rankings Edge Rankings Momentum 41.00 Growth 86.99 Quality 86.69 Value 52.18 Price Trend Short Medium Long Overview GOOGLAlphabet Inc $186.510.78% Market News and Data brought to you by Benzinga APIs

Alphabet (Google) Q2 Earnings Preview: Market Expert Says Mag 7 Stock 'Has Been Anything But' Magnificent - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

Tim Melvin's system has spotted 10X winners like NVIDIA and Matador -- see his next 6 picks and the options strategies to multiply gains at a free July 23 event. Register Here. Alphabet Inc GOOGGOOGL could show investors and analysts growth in several areas, such as YouTube, cloud and AI when the company reports second-quarter financial results after market close Wednesday. Here are the earnings estimates, what experts are saying ahead of the report and key items to watch. Earnings Estimates: Analysts expect Alphabet to report second-quarter revenue of $93.72 billion, up from $84.74 billion in last year's second quarter, according to data from Benzinga Pro. Alphabet has beaten analyst estimates for revenue in 10 straight quarters. Analysts expect Alphabet to report second-quarter earnings per share of $2.17, up from $1.89 in last year's second quarter. The company has beaten analyst estimates for earnings per share in nine straight quarters. What Experts Are Saying: Freedom Capital Markets Chief Global Strategist Jay Woods says that Magnificent 7 member Alphabet has "been anything but" magnificent. "The company has been facing continual headwinds due to antitrust and litigation risk, AI competition disrupting search and a massive CapEx spend," Woods said in a weekly newsletter. Woods said Alphabet stock is down year-to-date and 11% off of all-time highs. With shares "stuck in neutral," Woods said the company could see the stock trade higher after the financial results. "If the company can address these concerns and focus on the positives out of its YouTube and Waymo divisions, it could be back on the upswing." Woods said technically the stock is in a key consolidation area when looking at 50- and 200-day moving averages. "The good news is that overall momentum continues to favor the upside." The market expert said a potential run to $200 could happen from a nice pop on earnings and shares could hit all-time highs. Raymond James analyst Josh Beck maintained an Outperform rating and $185 price target on Alphabet ahead of the earnings report. The analyst said search resilience and cloud momentum could be positive surprises in the quarter. Beck also said the U.S. Department of Justice trial overhang remains, but closing comments were positive and the company might not need to divest its Chrome business. "Bigger picture, we see the narrative potential shifting from AI Laggard to AI Leader and recommend long positions into GOOG and believe a few insightful comments from the management team," Beck said. The analyst is looking for management to indicate that it has accelerating AI search momentum, manageable DOJ headwinds and relative AI cost inflation resilience. Beck highlighted that Alphabet's forward (2026) price-to-earnings ratio of 17.8x trades at a discount to the average of peers like Meta Platforms, Microsoft, Nvidia and Apple. Read Also: Alphabet 'Well Positioned' For Google Search Dominance: Analyst Says Can 'Navigate The Shift To AI Search' Key Items to Watch: Most eyes will be on AI and cloud when Alphabet reports second-quarter financial results and tries to continue its streak of revenue and earnings per share beats to consensus estimates. The company's search business continues to see pressure from AI and some analysts and experts point to the growth of AI and chatbots hurting Alphabet's key Google Search unit. Look for Alphabet to share ways it's working with AI and making search better. YouTube could be a positive in the quarter and one of the company's key growth units. The company said it saw "robust momentum" across its business lines, highlighting strength in Google Search, YouTube, subscriptions and Google Cloud in the first quarter. A strong report with growth in cloud, search and YouTube could help send shares higher and lower fears of headwinds against the company. The company could also highlight its upcoming Made By Google 2025 event confirmed for Aug. 20. Alphabet is set to highlight new Pixel devices, the Pixel Watch 4 and AI-powered software upgrades, according to reports. GOOG Price Action: Alphabet stock closed up 0.50% to $192.11 on Tuesday versus a 52-week trading range of $142.66 to $208.70. Alphabet stock is up 0.8% year-to-date, marking the third-worst performance by a Magnificent 7 stock with Apple and Tesla negative year-to-date. Read Next: Trump Wants Babies To Get $1,000 To Invest At Birth: This Magnificent 7 Stock Tops Poll For 18-Year Growth Photo: Shuttestock GOOGAlphabet Inc$192.110.50%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum43.87Growth87.12Quality87.21Value50.79Price TrendShortMediumLongOverviewGOOGLAlphabet Inc$191.310.64%Market News and Data brought to you by Benzinga APIs

Google Cloud, YouTube, And Search Drive Big Upside: Goldman Sachs - Alphabet (NASDAQ:GOOGL)

Goldman Sachs analyst Eric Sheridan maintained a Buy rating on Alphabet GOOGL with a $234 price target on Friday, citing strong Q2 2025 results. Sheridan highlighted solid momentum in Alphabet's core businesses -- Search, YouTube, and Cloud -- and noted the company's aggressive AI push. He said the results addressed investor concerns around rising capital expenditures and long-term competitiveness in AI. Also Read: Google's AI Proves It's Boosting, Not Disrupting, Legacy Ad Monetization: Analyst Search & Other revenue rose 11.7% year-over-year, beating Goldman Sachs and FactSet estimates. Paid clicks grew 4%, accelerating sequentially and easing concerns over core ad performance. Management cited growth in both commercial and general queries, with AI features like Overviews and AI Mode driving higher engagement. AI Mode alone surpassed 100 million monthly active users in the U.S. and India. YouTube ad revenue climbed 13%, while the broader Subscriptions, Platforms & Devices segment rose 20%. Executives highlighted Shorts -- now averaging 200 billion daily views -- and the global expansion of Premium Lite as key growth drivers. Sheridan said these trends underscore YouTube's growing diversification beyond traditional ads. Cloud revenue surged 31.7% year-over-year, with operating margins expanding from 11.3% to 20.7%. The business continued to benefit from enterprise adoption of generative AI through Google Workspace and general-purpose compute workloads. While management acknowledged ongoing capacity constraints, they expressed confidence in scaling infrastructure to meet demand. One area of concern was Alphabet's updated capital expenditure forecast, which was raised to $85 billion for 2025 -- up 13% from prior guidance. Two-thirds will be allocated to servers, and the rest to data centers, reflecting the company's significant investment in AI infrastructure. Sheridan noted this raised questions about long-term capital intensity and returns but said management remains optimistic about the payoff. Sheridan highlighted the increasing usage of Gemini, AI agents, and multimodal search as examples of Alphabet's evolving AI strategy. The company remains confident in transforming Search through a multi-surface AI approach, leveraging its massive user base, rapid iteration cycles, and infrastructure scale -- seen as key differentiators in a crowded AI race. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started Despite negative sentiment around Alphabet's AI transition, Sheridan said its integration of AI across products, technical infrastructure, and user reach position it well for the future. He also pointed to the Cloud business's momentum and a recent capacity-sharing agreement with OpenAI as further validation. Two near-term events could shape the company's trajectory: the expected ruling in the U.S. search antitrust case by late August and the August 20 Pixel launch event, which may reveal deeper AI integration in hardware. Sheridan raised his forecasts following the strong quarter. He now expects Q3 FY2025 revenue of $99.69 billion, GAAP EBITDA of $38.47 billion, and GAAP EPS of $2.24. Full-year 2025 estimates were increased to $393.87 billion in revenue, $150.97 billion in EBITDA, and $9.75 in EPS. Alphabet still has about $70 billion remaining in its share repurchase program. While noting some caution around CapEx growth and declining network revenue, Sheridan reaffirmed his Buy rating, citing Alphabet's scale, innovation, and infrastructure investments as key advantages in the AI-driven computing era. Price Action: GOOGL stock is up 0.59% at $193.29 at last check on Friday. Read Next Google Future Divides Wall Street As AI Hype Meets Skepticism Image: Shutterstock GOOGLAlphabet Inc$193.220.54%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum55.40Growth87.41Quality86.90Value52.50Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Alphabet Q2 Beats Estimates, Boosts CapEx On Cloud Growth - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

Alphabet Inc GOOG GOOGL reported financial results for the second quarter after the market close on Wednesday. Here's a look at the key details from the period. Q2 Earnings: Google parent Alphabet reported second-quarter revenue of $96.43 billion, beating analyst estimates of $93.72 billion. The company reported second-quarter earnings of $2.31 per share, beating estimates of $2.16 per share. Alphabet has now exceeded analyst expectations on the top and bottom lines in 10 straight quarters, according to Benzinga Pro. Alphabet's earnings per share were up 22% year-over-year. Total revenue was up 14% year-over-year, driven by "robust momentum" across the business. Here's a breakdown of revenue by category: Google Search: $54.19 billion, up from $48.51 billion year-over-year YouTube Advertising: $9.8 billion, up from $8.66 billion year-over-year Google Cloud: $13.62 billion, up from $10.35 billion year-over-year Google Advertising: $71.34 billion, up from $64.62 billion year-over-year Alphabet ended the quarter with approximately $95.15 billion in cash, cash equivalents and marketable securities. "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," said Sundar Pichai, CEO of Alphabet. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started "We continue to see strong performance in YouTube as well as subscription offerings. And Cloud had strong growth in revenues, backlog and profitability. Its annual revenue run-rate is now more than $50 billion." Alphabet increased its capital expenditures outlook for 2025 to approximately $85 billion due to "strong and growing demand" for cloud products and services. Company executives will further discuss the quarter on a call with investors and analysts at 4:30 p.m. ET. GOOG Price Action: Alphabet shares were down 1.82% in after-hours, trading at $186.77 at the time of publication on Wednesday, according to Benzinga Pro. Read Next: Microsoft Raids Google DeepMind To Supercharge AI Copilot, Even As Redmond Cuts 9,000 Jobs Elsewhere: Report Photo: Shutterstock. GOOGAlphabet Inc$189.58-1.32%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum43.87Growth87.20Quality87.97Value51.48Price TrendShortMediumLongOverviewGOOGLAlphabet Inc$188.05-1.72%Market News and Data brought to you by Benzinga APIs

The Best Artificial Intelligence (AI) Stock to Buy With the Market At All-Time Highs | The Motley Fool

Some pundits are underplaying the big picture when it comes to shares of Alphabet. The S&P 500 keeps soaring to new highs, making it feel impossible to find a cheap large-cap stock to buy today. This is especially true in technology and artificial intelligence (AI). Stocks such as Nvidia and Microsoft have price-to-earnings (P/E) ratios approaching 40 or higher, making them risky for investors. Growth expectations are high for many companies, which can make it increasingly difficult to buy stocks for your investment portfolio, especially if you care about value investing. That isn't the case with every AI stock. Here's why Alphabet (GOOG 0.45%) (GOOGL 0.54%) is the one AI stock you can buy right now with stocks at all-time highs. Some pundits have deemed Alphabet -- parent company of Google -- an AI loser because of competition from ChatGPT. I think this underplays the big picture. Alphabet has perhaps the most to gain from AI through its various subsidiaries, while also employing the best data advantage of any big technology player because of all the user data from Google, YouTube, and other properties. AI is not going to eliminate Google Search -- it will take it to the next level. AI overviews are already growing like a weed for Google Search results, while the Gemini chatbot is helping with advanced conversational queries. An explosion in new AI technologies will greatly expand the addressable market for Google and its related properties. That's why revenue is growing at a 10% annual rate for Google Services, even though it generated $77 billion in revenue just in the first quarter. Another way Alphabet can benefit from AI demand is Google Cloud, which is growing revenue at an astonishing 28% year-over-year clip, and is close to surpassing $50 billion in annualized revenue (it may surpass that mark next quarter). AI workloads will need huge amounts of specialized computing power to function, which Google Cloud is set to provide. Let's not forget self-driving start-up Waymo, which is taking over the streets of America's big cities, using Alphabet's infrastructure, engineering, and AI expertise. It is an entire matrix of growth for Alphabet that can be supercharged by AI. AI requires a lot of upfront spending on data centers and computer chips in order to train and operate. Alphabet is planning to spend $75 billion on capital expenditures in 2025, mostly related to AI. This will increase depreciation and require steady growth in order to get a return on this investment, which some investors are skeptical about. Google Cloud used to be unprofitable, but it posted an 18% operating margin last quarter, a number that can keep expanding as it reaches larger scale. Due to these factors plus better hiring efficiency employed by Alphabet coming out of the pandemic, I think Alphabet's profit margins are set to keep inching higher over the next few years. Its operating margin recently hit a record of 33%. With huge operating leverage on its fixed-cost investments, I think this figure can grow to 40% over the long term, which is similar to Microsoft. With revenue at $359 billion that could grow to $400 billion or even $500 billion within a decade, a 40% operating margin could help Alphabet grow its operating income to $200 billion within a few years. That would make it the most profitable company in the world. With all the earnings flowing to its balance sheet, Alphabet is returning capital to shareholders through buybacks and dividends. It pays a dividend yielding 0.42% that is set to grow steadily, while shares outstanding have fallen by 12% in the last 10 years. Alphabet plans to keep repurchasing stock at these cheap prices. It has a P/E ratio of 21, which is the cheapest among the "Magnificent Seven" stocks. This is shocking to see, given how much Alphabet can benefit from AI and cloud computing growth. Add everything up, and Alphabet looks like a fantastic stock to buy today, even with the market at all-time highs.

Alphabet's Growth Accelerates in Q2 | The Motley Fool

In the first quarter of 2025, Alphabet handily beat expectations on both the top and bottom lines, with strong results across the entire business. So it's fair to say that expectations were high heading into the second quarter. For the second quarter, Alphabet beat expectations on both the top and bottom lines. Revenue came in at $96.43 billion, which was more than $2 billion ahead of estimates, and about $500 million of that beat was due to excellent (and better than expected) growth in Google Cloud revenue. On the bottom line, Alphabet reported $2.31 in EPS, which was $0.04 more per share than analysts had been looking for. Beyond the headlines, Alphabet's business looked very strong. Google Cloud remains the strong point, with 32% year-over-year revenue growth, which represents an acceleration over last quarter's growth rate. On the Google Services side of the business, revenue grew 12%. Performance was quite strong among all of the different service businesses: Alphabet ended the second quarter with $95.1 billion in cash and securities on its balance sheet. Despite the strong business performance, the initial reaction to Alphabet's earnings report was slightly negative. As of 4:15 p.m. EDT on Wednesday, Alphabet shares were trading about 1% lower. One potential reason for the negative reaction was increased capex as Alphabet aggressively builds out its artificial intelligence (AI) infrastructure. In fact, the company says it is increasing the 2025 capex forecast to $85 billion (previously $75 billion), and spent $22.4 billion in the second quarter. That's 70% more than the same period last year and 31% more than it spent in the first quarter. So far, it looks like the AI investment is positively impacting results, but the spending level might be concerning to investors. Google's cloud revenue is clearly the main driver of growth right now, so it will be an incredibly important figure to watch. It's also possible that the company's Other Bets segment, which includes autonomous vehicle start-up Waymo, could start to be a significant contributor to revenue within the next year or two, especially if the ramp-up in the robotaxi business continues. The Other Bets segment generated $373 million in revenue in the second quarter, a relatively tiny amount compared with Alphabet's other businesses, but this could grow significantly as Waymo's rollout continues.

Alphabet Just Gave Nvidia Investors Some Great News | The Motley Fool

The tech giant amped up its AI infrastructure spending plans for 2025. Over the next several weeks, companies will report financial and operating results for the second quarter of 2025. As usual, technology investors will be focused on one thing: artificial intelligence (AI). "Magnificent Seven" member Alphabet kicked things off earlier this week, reporting robust results across its search, advertising, and cloud computing divisions. While Alphabet shareholders should be encouraged by the internet giant's strong performance, I saw Nvidia (NVDA -0.12%) as the real winner from the company's second-quarter performance. Let's dig into some of the important moves Alphabet is making and assess how Nvidia is benefiting from them. During the Q2 earnings call, Alphabet's management updated some details of its financial guidance. Alphabet now plans to spend around $85 billion on capital expenditures (capex) in 2025. Of note, this is a $10 billion increase over the company's prior guidance. And there's more. "Looking out to 2026, we expect a further increase in capex due to the demand we're seeing from customers as well as growth opportunities across the company," said Chief Financial Officer Anat Ashkenazi. Despite its increasingly aggressive spending on AI infrastructure over the last few years, Alphabet has stated that it doesn't plan on slowing down anytime soon. This should be music to Nvidia's ears. Management consulting juggernaut McKinsey & Company is forecasting that AI infrastructure spending could reach $6.7 trillion by 2030. And its research suggests that almost half of that money will be allocated toward AI hardware for further data center construction. In addition, research from Goldman Sachs and JPMorgan indicates that generative AI could add between $7 trillion and $10 trillion to global gross domestic product in the long run. From a macroeconomic perspective, these secular trends bode well for Nvidia's compute and networking empire. Moreover, I think that Alphabet's decision to bump up its AI infrastructure spending again adds some credibility to those industry forecasts. Alphabet's management specified that it is raising its planned capex in order to accelerate the construction of data centers and position itself to fill the rising demand for capacity on the Google Cloud Platform. Increased spending on network equipment, servers, and cloud infrastructure should lead to rising demand for graphics processing units (GPUs). I see this as a major positive development as Nvidia is still scaling up production of chips made using its latest Blackwell architecture. Considering Nvidia holds an estimated 90% share of the data center GPU market, I see Alphabet's investments in AI infrastructure as a major tailwind for the chip king and further propels the company's momentum over competition in the chip space. With a market cap north of $4.2 trillion, Nvidia is currently the most valuable company in the world. While this might lead one to assume that the stock is expensive, its underlying valuation trends tell a different story. Nvidia currently trades at a forward price-to-earnings (P/E) multiple of 40. While this isn't "cheap" by traditional benchmarks, it is notably lower than the peak levels Nvidia has witnessed during the AI revolution. What makes these dynamics interesting is that Nvidia's growth trajectory is arguably far stronger today than it was 18 months ago when its forward P/E valuation peaked. The company remains at the center of the AI revolution, providing massive amounts of fast parallel-processing power to hyperscalers and accelerating AI workloads. To me, buying Nvidia stock at its current price is a no-brainer, and I see Alphabet's rising AI infrastructure spending as a long-term catalyst that should not be overlooked by growth investors.

Alphabet's AI Push Is Accelerating -- Is the Stock a Buy Now? | The Motley Fool

Alphabet is looking to be a big winner in artificial intelligence, defying skeptics. Alphabet (GOOGL 0.54%) (GOOG 0.45%) once again defied its critics who continue to believe the company will be a loser in artificial intelligence (AI). Not only did the company once again produce strong search revenue growth in its most recent earnings report, but that growth accelerated. In addition, Alphabet said that AI was positively impacting every part of its business. With cloud computing demand continuing to surge, the company upped its capital expenditure (capex) budget by an additional $10 billion to build out its data center capacity. It said in its Q2 earnings report that it now plans to spend $85 billion in capex this year, and anticipates spending even more in 2026, given the strong demand it's seeing for Google Cloud products and services. AI was the biggest growth driver behind Alphabet's strong results, with cloud computing once again leading the way. Google Cloud revenue surged 32% to $13.6 billion in the second quarter, while segment operating income skyrocketed from $1.2 billion a year ago to $2.8 billion. However, the company said its current capacity constraints could extend into 2026, despite its large capex investments. Ultimately, that's not a bad problem to have, as it's just a sign of how strong demand is. Alphabet called out its Gemini 2.5 models as catalysts for growth, saying that 9 million developers have now built with Gemini. It also noted how leading AI research labs are turning to use Google's Tensor Processing Units (TPUs) as their AI chips of choice. While cloud computing is leading the way with growth, all eyes continue to be on Alphabet's core Google Search business. On that front, the company once again delivered. Google Search revenue climbed 12% to $52.2 billion, which was an acceleration from the 10% growth it saw in Q1. Alphabet said over 2 million people in more than 200 countries use AI Overviews monthly, while AI Mode has over 100 million monthly active users, despite only being launched in the U.S. and India so far. It said that AI is contributing significantly to increased search usage, with AI Overviews now driving over 10% more queries globally. Meanwhile, the Gemini app now has more than 450 million monthly active users. Alphabet said the number of daily requests on the app jumped over 50% sequentially. The company also called out its strength in multimodal search, with Google Lens and Circle to Search. It said visual searches grew 70% year over year, and that many are shopping queries. YouTube continues to deliver strong results, with ad revenue rising 13% to $9.8 billion. YouTube, along with Google One (cloud storage) and Music, also helped drive a 20% increase in subscription and device revenue to $11.2 billion. The company said Shorts are becoming a significant contributor, and that the format allows for more ad opportunities on average. It recently introduced Veo 3 to Shorts; the AI tool can create videos from photos and add generative effects to make content creation easier on the platform. Alphabet is also continuing to expand its Waymo robotaxi business. It recently launched in Atlanta and is currently testing the service across 10 cities, including New York and Philadelphia. It hopes to launch the service in all 10 cities in the near future. Overall, Alphabet grew total quarterly revenue by 14% (13% on a constant currency basis), to $96.4 billion. Earnings per share jumped 22% year over year to $2.31. The results easily surpassed analyst consensus estimates (as compiled by LSEG), which were looking for EPS of $2.18 on revenue of $94 billion. Looking ahead, Alphabet said it was cautious on the advertising outlook because it's lapping strong spending in the financial services vertical last year and will see no benefit from political ad spending this year. However, it does expect to see a tailwind in Q3 from current foreign exchange rates. Alphabet yet again turned in a strong quarter, demonstrating that the company is on track to be an AI winner. It continues to see solid growth in its search business, though its new AI Mode is currently only in two countries. Gemini has become a top AI model. And with the huge distribution edge it has with the Chrome browser and Android operating system, the company is well positioned in a shifting AI-search landscape. At the same time, Google Cloud continues to be a monster, generating robust revenue growth; it has scaled up to the point that it now has incredible operating leverage. Throw in the strength at YouTube and the emerging Waymo robotaxi business, and Alphabet is cooking. Best of all, you can still get into Alphabet stock on the cheap. The stock only trades at a forward price-to-earnings ratio (P/E) of around 19 times 2025 analyst estimates, and a forward price/earnings-to-growth ratio (PEG) of 0.8. (Stocks with PEG ratios below 1 are typically considered undervalued.) With AI helping drive growth and Alphabet's AI push only accelerating, now is a great time to buy the stock.

2 Artificial Intelligence (AI) Stocks That Are Still on Sale After the Tech Rally | The Motley Fool

The year 2025 has been very volatile for the stock market. Currently, the benchmark S&P 500 index is trading at nearly 29 times its trailing earnings, far higher than its historical median of 17.9 times. While this signals stretched valuations in the market, not all artificial intelligence (AI) stocks joined the frenzy. There are still companies, such as Alphabet (GOOG 0.46%) (GOOGL 0.54%) and International Business Machines (IBM -0.31%), that possess cutting-edge AI capabilities, scale, brand name, and solid financials, trading at modest valuations. Here's why these stocks seem impressive picks in July 2025. Alphabet is one of the few AI powerhouses that surprisingly remained affordable amid the AI-driven technology rally. Currently trading at just 18.7 times forward earnings, the company is significantly cheaper than other technology giants, such as Microsoft, which trades at 32.8 times forward earnings, and Nvidia, which trades at 36 times earnings. This discounted valuation appears highly unjustified considering Alphabet's exceptional financial strength and its robust and comprehensive AI ecosystem, which is strengthening its Search business as well as Google Cloud and YouTube. Alphabet delivered stellar performance in the second quarter of fiscal 2025 (ending June 30), with revenues and earnings surpassing consensus expectations. The company generated revenues of $96.4 billion, a 14% increase year over year, while net income reached $28.2 billion, representing 19% growth. This performance was mainly driven by the exceptional growth of its AI and cloud business. Alphabet's AI Overviews (a feature that provides direct answers and summaries at the top of search results) is currently serving over 2 billion users monthly across more than 200 countries and 40 languages. This is helping drive commercial queries for its Search business. Alphabet's Google Cloud business is also experiencing rapid growth, with deals over $250 million doubling year over year and the company signing the same number of billion-dollar deals in the first half of 2025 as in all of 2024. The recent OpenAI deal to use the Google Cloud platform as an infrastructure provider for its ChatGPT can prove to be a major catalyst in the long run. YouTube also dominates streaming, with over 200 billion daily views on YouTube Shorts. It's No.1 based on streaming time in the U.S. Alphabet's Gemini 2.5 Pro "thinking" AI model has shown improved performance compared to competitors in several complex tasks at lower costs. This technological edge appears to have driven an 80% surge in usage for the Google AI Studio platform and the Gemini API in April 2025. Nearly 9 million developers have already used the Gemini 2.5 models. Finally, although the market has become concerned about Alphabet's decision to increase capital spending to $85 billion in 2025 compared to the prior estimate of $75 billion, these strategic AI infrastructure investments will prove beneficial for the company in the long run. The company also boasts a very healthy balance sheet with $95 billion in cash at the end of Q2. It generated $66.7 billion in trailing-12-month free cash flow. While the risks of disruption in the search market from AI browsers cannot be ignored, Alphabet's Q2 results have demonstrated the company's ability to monetize AI successfully. Considering all the factors, Alphabet appears to be a solid pick in 2025. International Business Machines, commonly referred to as IBM, remains a significant enterprise AI player that Wall Street surprisingly overlooked for the past several years. The stock has crashed after an impressive Q2 fiscal 2025 performance likely due to a weaker-than-expected software performance. Trading at 26.5 times forward earnings, the company is also valued at a significant discount compared to technology giants like Microsoft and Nvidia. The $34 billion acquisition of Red Hat transformed IBM from a legacy technology company into a significant player in the AI and hybrid cloud space. Red Hat business reported a 14% year-over-year revenue jump in Q2. OpenShift, Red Hat's hybrid cloud platform, reported a 20% year-over-year rise in revenues and reached annual recurring revenues (ARRs) of $1.7 billion. Unlike many technology competitors focusing on the consumer AI segment, IBM is targeting the enterprise AI market, especially in regulated industries and those involving complex hybrid cloud requirements. The company's full-stack AI suite watsonx, which leverages Red Hat's infrastructure, enables secure and compliant AI use in sectors such as finance, banking, and government. The recently announced acquisition of start-up Seek AI will further strengthen the watsonx platform with natural language capabilities. All these initiatives have translated into IBM's generative AI book of business now standing at $7.5 billion inception-to-date in Q1, significant growth from $6 billion reported in the previous quarter. The overall software business (including Red Hat, automation, data, and transaction processing) reported 8% year-over-year growth in Q2, while annual recurring software revenue reached $22.7 billion, a 10% year-over-year increase. Software now accounts for 45% of IBM's business, with highly recurring revenue streams. IBM's infrastructure business delivered exceptional results in Q2, with revenues growing 11% year over year. IBM Z (a family of high-performance, mainframe computers for mission-critical workloads) revenues increased 67% year over year in the same period. Demand has been strong for the z17 next-generation mainframe. Considering the many tailwinds, the stock can prove to be a worthwhile addition to the investor's portfolio.

2 Top Stocks That Could Dominate the Rest of 2025 | The Motley Fool

The markets are still reaching new highs in the middle of the year. The Nasdaq Composite is currently up 9.1% year to date at the time of writing. In the aftermath of the market sell-off earlier this year, two top tech stocks asserted their dominance in the second quarter. Since April 1, Nvidia (NVDA 1.83%) shares are up 57%, while shares of Alphabet (GOOGL -0.30%) (GOOG -0.32%) are up 22%. Here's why these stocks could outperform for the rest of 2025 and remain rewarding investments for the long term. Nvidia is providing mission-critical technology to power the revolution in artificial intelligence (AI). It focuses on developing graphics processing units (GPUs), which were originally designed for graphics-intensive software like video games, and are now being used by the most powerful supercomputers. The company's market cap is now over $4 trillion, making it the most valuable company in the world. Nvidia controls around 90% of the data center GPU market. Its hardware is found in all the leading data centers and used by leading AI researchers like OpenAI, and these customers continue to pour billions into new chips. Last year, revenue doubled to $131 billion, and the current Wall Street consensus forecast has that reaching $200 billion this year. All signs point to Nvidia's revenue continuing to grow into the hundreds of billions of dollars over the next several years, as the company's addressable market continues to expand. For example, nations around the world are building their own sovereign AI infrastructure to be less dependent on foreign AI models that weren't trained on their own languages and cultures. Nvidia CEO Jensen Huang says this is a $1.5 trillion opportunity. Because there's no substitute for Nvidia's ultrapowerful GPUs, the company stands to generate substantial wealth for long-term investors. On top of the sovereign AI opportunity, Nvidia also should benefit from growth in robotics and autonomous vehicles. Huang sees the potential for robots to be the next multitrillion-dollar industry. If you didn't buy shares during the stock's recent dip, you shouldn't feel you missed out. It's still trading at a reasonable forward earnings multiple of 40; this is within its trading range over the last three years. Long-term, the stock still offers substantial upside as it capitalizes on the global investment pouring into AI from every industry. Alphabet has a strong competitive moat based on billions of people who use Gmail, YouTube, Search, and its other services every day. The company reported another stellar earnings report for the second quarter, beating expectations, and showing why it's a leading AI company to bet on for the long term. The large number of people who use Google services continued to fuel strong growth in advertising revenue in the second quarter. Alphabet said total revenue grew 14% year over year, with net income surging 19%, and earnings per share up 22%. Solid growth in Google Search revenue eased fears that competing AI models from xAI and OpenAI are hurting Google's core business. Search revenue hit a record $54 billion, up 12% year over year. This growth indicates healthy advertising demand, as users engage with Google's AI Overviews feature, which puts a convenient summary at the top of a search query. Another key indicator of Google's competitive position is strong growth in the cloud business. Google Cloud has been gaining share in a $348 billion cloud market, according to Synergy Research. Revenue hit $13.6 billion in Q2, up 32% year over year. Google Cloud continues to show impressive margin improvements, with operating income increasing from $1.2 billion in Q2 2024 to $2.8 billion in the recent quarter. These results indicate that Alphabet stock is undervalued. Despite prospects for double-digit earnings growth in the coming years, you can buy the stock at a forward P/E of just 20, which looks like a steal for this Magnificent Seven company. The stock seems in the process of being revalued by the market and might be trading at a higher P/E entering 2026, so it may outperform market averages.

Pichai: AI Overviews Top 2 Billion Users and Boost Search by 10% | PYMNTS.com

"Our AI [artificial intelligence] infrastructure investments are crucial to meeting the growth and demand from cloud customers," said Alphabet and Google CEO Sundar Pichai during a call with analysts to discuss second quarter earnings for the period ending June 30. Alphabet did not give a figure for capex for 2026. In the second quarter, two-thirds of capex went to servers and the rest to data centers and networking equipment. Shares of Alphabet fell 1.3% to $189.05 in after-hours trading. Alphabet's decision to step up building of AI infrastructure aims to bring on more capacity to process AI workloads. That's due to higher demand for AI services at Google Cloud, according to the company. In the second quarter, Google Cloud revenues increased 32% to $13.6 billion and now has an annual run rate of more than $50 billion. Cloud also has a backlog of customer orders, the company said. Asked whether all this investment would result in a robust ROI, Pichai said the company is building "an installed base" and efficiently making investments to grow the cloud business. "We'll be able to have a healthy ROI on our investments, particularly in this AI moment," Pichai said during an earnings call with analysts. Pichai also noted that Google Cloud's churn rates are "very low" and its customer satisfaction is "very high." In the quarter, Google Services revenue -- which includes search, subscriptions, platforms, devices and YouTube ads -- rose by 12% to $82.5 billion from the prior year. Pichai said AI Overviews now has more than 2 billion monthly users across 200 countries and territories. It also drives 10% more search queries globally. For YouTube, short videos are now earning as much revenue per watch as traditional videos. Read more: Google, Meta and Others Pledge Billions of Dollars to Build AI Data Centers One analyst asked for Pichai's thoughts on the talent poaching going on in the AI community. Microsoft reportedly hired two dozen Google DeepMind employees in recent months, according to CNBC. One, Mustafa Suleyman, Microsoft's AI chief, was a co-founder of DeepMind. Meta also reportedly hired three Google AI researchers who worked on a previous version of Google's Gemini model -- with Deep Think -- that just won a gold medal at the prestigious International Mathematical Olympiad. Pichai said that while individual hires tend to get headlines, the reality is that Google hires a number of skilled workers. He also said that top researchers join companies based on a host of reasons, not just compensation. These reasons would include access to computing power and the quality of peers they would meet at work. "We're pretty competitive on all those fronts," Pichai said. In the second quarter, Alphabet reported a 19% increase in net income to $28.2 billion, or $2.31 per share, beating the consensus forecast of $2.20 per share. In the same quarter a year ago, Alphabet earned $23.6 billion, or $1.89 per share. Revenue rose by 14% to $96.4 billion. Wall Street analysts' consensus estimate was $93.98 billion, according to S&P Global Market Intelligence. Google Adds AI-Powered Local Business Calling to Search Apple and Google Declared Mobile Duopoly by UK Regulator

Alphabet outlines $85B 2025 CapEx plan as AI and cloud demand drive expansion (NASDAQ:GOOG)

Sundar Pichai, CEO, highlighted a "standout quarter" with "robust growth across the company," attributing momentum to AI's expanding impact: "This quarter, Search delivered double-digit revenue growth. Our new Search features continue to perform well. AI Mode has launched in the Seeking Alpha's Disclaimer: The earnings call insights are compilations of earnings call transcripts and other content available on the Seeking Alpha website. The insights are generated by an AI tool and have not been curated or reviewed by editors. Due to inherent limitations in using AI-based tools, the accuracy, completeness, or timeliness of the earnings call insights cannot be guaranteed. Please see full earnings call transcripts here. The earnings call insights are intended for informational purposes only. Seeking Alpha does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.

Google Earnings Q2 2025: Revenue Hits $81.7 Billion on AI and Cloud Growth

YouTube also did great, raking in $9.8 billion in advertising sales, while Alphabet's search core business was still strong. Alphabet's aggressive shift into AI and cloud is just getting started, however. The company projected $85 billion in 2025 capital expenditure, its largest outlay to date, focusing on AI infrastructure, chip design, and hiring talent. CEO Sundar Pichai justified the spending binge, stating that it was necessary to keep pace with Microsoft, Meta, and OpenAI in the rapidly evolving AI landscape. Google is doubling down on its Gemini model, applying it in search, productivity software, and cloud platforms. R&D expenses rose 16%, with Google hiring top talent and acquiring Windsurf, a startup renowned for its . Despite the positive outlook, challenges remain. Google is currently under investigation for antitrust violations in the US. The investigation is related to accusations of search and ad-tech monopolies, and court rulings are still pending. Alphabet's self-driving car arm, Waymo, fell short of expectations with $373 million in revenue, compared to the anticipated $429 million.

Alphabet will seek to reassure investors as AI rivals step up competition

Alphabet, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a new AI-only mode to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. The context Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total US$320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. The fundamentals Alphabet is expected to report a near 11 per cent jump in total revenue for the second quarter, per LSEG data. Analysts expect a 7.5 per cent rise in advertising revenue and a 26.2 per cent jump in its cloud computing segment. Per-share earnings are expected to be around US$2.18, excluding one-off items. Wall Street sentiment Alphabet shares are largely flat so far this year. The Stock is among the laggards in the "Magnificent Seven" group of megacap stocks, with Nvidia leading the range with a 28 per cent jump and Tesla at the bottom with a 19% decline. Alphabet is rated "buy" on average among 55 brokerages, with a median price target of $203.84. (Reporting by Deborah Sophia and Zaheer Kachwala in BengaluruEditing by Rod Nickel)

Alphabet Earnings Preview: Can Cloud Growth Counter Rising AI Search Competition? | Investing.com UK

Looking for actionable trade ideas? Subscribe now to unlock access to InvestingPro's AI-selected stock winners for up 50% off amid the summer sale! In recent days, Alphabet (NASDAQ:GOOGL)'s stock price shows that buyers are aiming to push it back toward its all-time high of around $207 per share. The upcoming quarterly earnings report, expected after today's US market close, could help drive that move if the results are strong. The tech giant's earnings will offer key insights into how it's handling rising competition in AI and search. However, the market is optimistic ahead of the report. If Alphabet beats expectations again, bulls may take control through the end of July, assuming broader economic conditions remain supportive. Investors are also watching the outcome of Alphabet's antitrust cases, especially those involving the Chrome browser. A court decision is expected next month, and one possible outcome could be a forced sale of Chrome. However, this risk appears to be at least partly reflected in the stock's current price. Advertising is still Alphabet's main source of revenue, but relying too heavily on it carries risks -- especially with growing competition in search from generative AI tools. To reduce this dependence, the company is using its strong free cash flow to invest in artificial intelligence. A key focus is Google Cloud, Alphabet's flagship AI offering. With its experience, resources, and vast data, Alphabet is well-positioned to lead in this space. Google Cloud revenue is expected to grow 26% in 2025, reaching $13.12 billion. YouTube also remains a valuable asset, offering a large user base and steady revenue that adds stability to the business. In short, investors should watch how Alphabet grows revenue not just from advertising, but also from AI, where spending is likely to rise in the coming years -- alongside tracking core financial metrics. In recent years, Alphabet has reported a consistent streak of rising earnings per share (EPS), with the last quarter showing a strong performance that included an EPS surprise of nearly 40%. This quarter, EPS is expected to be lower year-on-year, but we should still see solid quarter-on-quarter growth -- unless there are any unexpected developments. Revenue is also expected to continue its upward trend and could surpass $94 billion if results come in above expectations. The uptrend in Alphabet (Class A) stock appears to be gaining momentum, as shown by the steeper slope of the current short-term trend line. If the market reacts positively to the upcoming earnings report, the first key target for buyers is likely the psychological level of $200 per share. From a technical perspective, the all-time high near $206 per share could act as resistance and trigger at least a temporary pullback if tested. On the downside, the key support levels to watch are the rising trend line and the $180 mark. **** Whether you're a novice investor or a seasoned trader, leveraging InvestingPro can unlock a world of investment opportunities while minimizing risks amid the challenging market backdrop. Subscribe now for up to 50% off amid the summer sale and instantly unlock access to several market-beating features, including: Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk is at the investor's own risk. We also do not provide any investment advisory services.

Alphabet will seek to reassure investors as AI rivals step up competition

(Reuters) -Alphabet, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a new AI-only mode to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. THE CONTEXT Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total $320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. THE FUNDAMENTALS ** Alphabet is expected to report a near 11% jump in total revenue for the second quarter, per LSEG data. ** Analysts expect a 7.5% rise in advertising revenue and a 26.2% jump in its cloud computing segment. ** Per-share earnings are expected to be around $2.18, excluding one-off items. WALL STREET SENTIMENT ** Alphabet shares are largely flat so far this year. ** Stock is among the laggards in the "Magnificent Seven" group of megacap stocks, with Nvidia leading the range with a 28% jump and Tesla at the bottom with a 19% decline. ** Alphabet is rated "buy" on average among 55 brokerages, with a median price target of $203.84. (Reporting by Deborah Sophia and Zaheer Kachwala in BengaluruEditing by Rod Nickel) By Deborah Mary Sophia and Zaheer Kachwala

Alphabet: strong growth in Q2, driven by AI

Alphabet announced that its net income rose 19% to $28.2bn in Q2 2025, with EPS up 22% to $2.31. Its operating margin was 32.4%, better,than last year, despite a charge related to a settlement agreement. NB: pmt +3%. Revenue reached $96.4bn, up 14%, benefiting from sustained momentum across all businesses. Google Services revenue grew 12% to $82.5bn, while Google Cloud revenue jumped 32% to $13.6bn. We are at the forefront of AI, which is driving growth across all of our businesses, management said, adding that Alphabet now expects $85bn in capex in 2025 to meet growing demand for the Cloud.

Alphabet can't get enough

Alphabet is the first of the Magnificent Seven to publish its results, and the tone has been set. The group exceeded all forecasts with revenue of $96.43bn in Q2, compared with $94bn expected according to the LSEG consensus, and EPS of $2.31, above the $2.18 forecast. This performance would satisfy many, but not Alphabet. Chief Financial Officer Anat Ashkenazi announced a $10bn increase in investments, bringing the total to $85bn. This decision may seem risky, especially as the company faces several challenges. Let's go back to the beginning of 2025: the announcement of DeepSeek shook the markets, prompting tech giants to ramp up their investments in AI. At that time, Microsoft was forced to justify a $100bn capex for 2025, while Alphabet announced $75bn focused on its Google Cloud business. So, inevitably, when the company unveiled an additional $10bn, investors paused for a moment... before being reassured by the conference call. Alphabet remains a force to be reckoned with in AI, notably thanks to its Gemini agent, which is considered one of the best in the industry. "We believe that, in Google's case, the increase in capex is a good problem to have: it reflects strong growth in demand for AI and Google's improved ability to invest thanks to increased access to AI infrastructure," said Doug Anmuth, an analyst at JPMorgan. In the same vein, Ashkenazi insisted: "These investments are necessary to support our growth." It is difficult to question Alphabet when the Google Cloud division is the driving force behind the quarter, with a 32% increase in revenue, compared to expectations of +26.5%. The number of customers climbed 28%. Doug Anmuth sums it up: "Google Cloud is almost half the size of AWS and two-thirds the size of Azure, while growing about twice as fast as AWS and almost as fast as Azure." In this context, it is not impossible that Broadcom, a key partner in ASICs, will revise its forecasts upwards. For the record, Broadcom is the supplier of Google's highly coveted Ironwood TPUs. In June, Reuters revealed that OpenAI, a direct competitor with ChatGPT, had added Google Cloud to its list of suppliers to benefit from the power of these chips. This will further strengthen the group's momentum and its central position in the AI ecosystem. With such strong momentum and a valuation that remains lower than its peers, Alphabet ticks many boxes. However, two factors warrant particular vigilance. First, nearly 75% of its revenue still comes from advertising, supported by its dominant position in search. But this model could be challenged with the emergence of AI and changing internet usage patterns. While the group claims that features such as AI Overviews and AI Mode are attracting more and more users, their performance over time will need to be monitored closely. JPMorgan also points out that "AI Overviews are monetizing at roughly the same rate as traditional search. [...] Advertisers seem willing to pay more for a more qualified sales lead." Finally, Alphabet is facing a Department of Justice (DOJ) investigation for unfair competition. The verdict, expected in August, could have serious consequences: the company could be forced to divest itself of its Google Chrome browser. According to Justin Post and Nitin Bansal, analysts at Bank of America, an unfavorable ruling would pose a serious risk.

Google's AI strategy is working, says Sundar Pichai as Alphabet reports strong Q2 results

Pichai also highlighted the success of new AI-powered features like AI Overviews and AI Mode in Google Search. Alphabet, the parent company of Google, has reported strong financial results for the second quarter of 2025. For the quarter ending June 30, the company reported a 14 percent year-over-year increase in revenue, reaching $96.4 billion. Net income rose by 19 percent, while earnings per share also saw a 22 percent jump to $2.31. The company's core services, including Google Search, YouTube ads and subscriptions, continued to perform well. Google Services alone brought in $82.5 billion in revenue, growing 12 percent from the previous year. Google Cloud stood out with the highest growth rate among all segments. Revenue for the cloud business jumped 32 percent to $13.6 billion. Also read: Apple's new AppleCare One plan offers multi-device coverage: Check price and other details "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," said Sundar Pichai, CEO of Alphabet. "AI is positively impacting every part of the business, driving strong momentum." Pichai also highlighted the success of new AI-powered features like AI Overviews and AI Mode in Google Search, saying they are performing well. YouTube and subscriptions also remained strong contributors. Also read: OpenAI partners with Oracle to scale up Stargate AI data centers: All you need to know Alphabet's total operating income increased 14 percent, and the company reported an operating margin of 32.4 percent. This was supported by revenue growth and better cost efficiencies, although a portion was offset by a legal settlement charge. To keep up with rising demand for its cloud and AI offerings, Alphabet plans to increase capital spending to approximately $85 billion in 2025. Alphabet's strong Q2 results show that its AI-driven strategy is paying off across multiple business areas. Also read: YouTube removes nearly 11,000 propaganda channels linked to China and Russia