Alphabet's Q1 Earnings: AI Advancements and Regulatory Challenges Amid Market Pressures

Alphabet to report Q1 earnings results after the bell

Google CEO Sundar Pichai testifies before the House Judiciary Committee at the Rayburn House Office Building on December 11, 2018 in Washington, DC. Alphabet, the parent company of Google and YouTube, is set to report first-quarter earnings after the bell Thursday. Here's what analysts are expecting. Google finds itself at the center of an artificial intelligence arms race where its position may be threatened pending mounting regulation and competition from generative AI companies, including OpenAI and Anthropic. The company is also among those bracing for the potential impact from President Donald Trump's tariffs, which could result in a pullback in advertiser spending due to tighter budgets. Alphabet shares have dropped more than 17% in 2025 so far. Wall Street is expecting Alphabet to report 10% year-over-year revenue growth for the first quarter, which included a slew of AI announcements, its largest-ever acquisition, cost cuts and regulatory hurdles. In March, Google released Gemini 2.5, its "most capable" artificial intelligence model suite yet, and Gemma 3, the company's latest open model. The timing of Gemini 2.5 and Gemma 3 comes after DeepSeek in January released its R1 model, which caused a rift in Silicon Valley after the Chinese startup claimed its AI model was trained at a fraction of the cost of other leading models. Google AI chief Demis Hassabis told employees at an all-hands meeting in February that he was not worried about DeepSeek and that Google has superior AI technology. "We're very calm and confident in our strategy, and we have all the ingredients to maintain our leadership into this year," Hassabis said, calming concerns from investors and employees alike. He added, however, he thinks the Chinese company is still "something to be taken seriously." Google this quarter also announced new personalization features for Gemini, allowing the chatbot to reference users' search histories, and users can also connect Gemini to other Google apps, including Calendar, Notes, Tasks and Photos. During the quarter, Nvidia CEO Jensen Huang announced it would be partnering with Google's Gemini products, giving the company high praise. "No company is better at every single layer of computing than Google and Google Cloud," Huang said. Alphabet also had a number of announcements in autonomous driving. In March, Waymo began offering robotaxi rides in Austin, Texas, through the Uber app and opened up a waitlist in Atlanta. Those markets are just two of several more expected expansions in the U.S. this year. Alphabet also made its largest acquisition ever in March when it agreed to buy Wiz for $32 billion in cash, almost $10 billion more than it offered for the startup in 2024, and said it expects the deal to close next year, subject to regulatory approvals. With the acquisition, Google will seek to bolster its cloud division's security offerings. Google is behind Amazon and Microsoft in cloud market share, which may help the company's argument to obtain regulatory approval. Google this quarter also faced a slew of regulatory and legal challenges. Last week, a federal judge ruled that Google held illegal monopolies in online advertising markets due to its position between ad buyers and sellers. The ruling represents a second major antitrust blow for Google. Last August, a judge determined the company has held a monopoly in its core market of internet search. In April, the company reached a settlement with its employee union, where it agreed to reverse a policy forbidding employees from discussing antitrust litigation. The settlement, which marked a major victory for Google staffers, came ahead of Google's remedy trial, which will determine the consequences of the search monopoly ruling over the next few weeks. Education tech company Chegg in February filed a lawsuit against Google. Chegg claimed that Google's "AI summaries" feature in search have hurt the online education company's traffic and revenue. Similarly, Reddit in February claimed that Google's search algorithm caused some "volatility" with user growth in the fourth quarter, but the company's search-related traffic has since recovered, CEO Steve Huffman said.

Google to report earnings amid justice department lawsuits and Trump tariffs

Parent company to report revenue as it's embroiled in 17% drop in stock price and tariffs levied on its trade partners Google's parent company Alphabet will report its first quarter earnings on Thursday, which come as the tech giant is embroiled in antitrust lawsuits brought by the US government and a 17% drop in its stock price since the beginning of the year. It's also the company's first earnings report since Donald Trump levied tariffs on trade partners around the world. Despite the upheaval, analysts appear optimistic on Alphabet's outlook projecting first quarter revenue of $89.2bn, up 11% since the same time last year, and earnings of $2.01 per share, up 7%, according to consensus estimates. Analysts don't expect the global tariffs to create much of an impact for Alphabet, since they were mostly instituted after the end of the quarter. Alphabet is one of the world's most valuable companies, worth nearly $2trn. But economic headwinds that include high tariffs and possible trade wars, along with various legal battles brought by governments worldwide, could be a hit for the tech behemoth. Google returned to court in Washington DC this week for the conclusion of a lawsuit brought by the US Department of Justice. The government sued Google in 2020 alleging it acted illegally to maintain a monopoly of the search engine market. The justice department won that case after a trial last year and now the two parties are in court again to decide whether Google will be forced to break off parts of its company, including its Chrome browser. In a blog post on Sunday, Google's vice-president of regulatory affairs, Lee-Anne Mulholland, wrote that the justice department's lawsuit "is a backwards-looking case at a time of intense competition and unprecedented innovation" and said that the company will appeal. Japan and the European Union have also alleged that Alphabet has broken the law by operating an illegal monopoly with its search engine practices. In a separate justice department antitrust lawsuit, which wrapped last week, a federal judge ruled that Google had illegally monopolized some of its online advertising technology. Google has said it will also appeal the "adverse" portion of this ruling. Advertising is Google's core business, making up about 75% of its total revenue, according to Statista. That number has fallen 13% since 2017 though, and the company says it's working on shifting its ads business to emphasize more artificial intelligence tools and capabilities for marketers. Artificial intelligence is a huge growth area for Alphabet, as it faces competition from companies like Microsoft, OpenAI and China's DeepSeek. In its last earnings report in February, Alphabet said it plans to spend $75bn on capital expenditures in 2025, which will mostly be used to expand its AI capabilities and infrastructure. Investors have been looking at how the company is integrating the technology into its suite of services, including Google Search, YouTube and Google Cloud.