Google's AI Strategy Pays Off with Historic $100 Billion Quarter

Google parent Alphabet posts first $100 bn quarter as AI drives growth

San Francisco (United States) (AFP) - Google parent Alphabet reported its first-ever $100 billion quarterly revenue on Wednesday, powered by strong growth across its core search business and rapidly expanding cloud division that was buoyed by artificial intelligence. The tech giant's revenues jumped 16 percent year-on-year to $102.3 billion in the third quarter, beating analyst expectations and marking a milestone for the company founded by Larry Page and Sergey Brin in 1998. "Alphabet had a terrific quarter, with double-digit growth across every major part of our business. We delivered our first-ever $100 billion quarter," said CEO Sundar Pichai in a statement. Net income surged 33 percent to $35 billion, with the company pointing to its ability to capitalize on the artificial intelligence boom that is reshaping the tech landscape. Google's core search and advertising business remained the primary revenue driver, generating $56.6 billion, up from $49.4 billion a year earlier. YouTube advertising revenues also grew strongly to $10.3 billion from $8.9 billion. But it was Google Cloud that stole the spotlight, with revenues soaring 34 percent to $15.2 billion. The cloud division, which competes with Amazon Web Services and Microsoft Azure, has become a key growth engine for Alphabet. The company's ambitious approach to offering AI "is delivering strong momentum and we're shipping at speed," Pichai said, highlighting the global rollout of AI features in Google Search and the company's Gemini AI models. The company said its Gemini App now boasts over 650 million monthly active users. However, the results were partially overshadowed by a $3.5 billion fine imposed by the European Commission in September for competition law violations in its ad tech business. Excluding this penalty, operating income would have increased 22 percent instead of the reported 9 percent, the company said. The strong performance comes as Alphabet ramps up capital spending to meet surging demand for AI infrastructure. The company now expects 2025 capital expenditures of between $91-$93 billion, reflecting massive investments in data centers and computing power to fulfill its AI ambitions. The company also reported having over 300 million paid subscriptions across services like Google One and YouTube Premium. Despite the robust growth, Alphabet's experimental "Other Bets" division, which includes autonomous vehicle unit Waymo, posted a loss of $1.4 billion on revenues of just $344 million. Google's shares have surged by nearly 40 percent in the thrid quarter, with investors also buoyed by the company's success in persuading a federal judge to deny a US government request that it sell off its Chrome browser as a solution in an antitrust trial. The judge was swayed by arguments that Google's world-dominating search engine -- the heart of Google's business -- faces stiff competition from ChatGPT and other AI chatbots.

Everyone Said AI Would Kill Google. Its First-Ever $100 Billion Quarter Just Proved Them Wrong

Every story about Google starts and ends with search. It makes sense -- Google is a search engine. It's not only the company's most important and profitable business, but it's the thing that has defined the internet for two decades. But for most of the past two years, the biggest story about Google has been that artificial intelligence would, inevitably, make search obsolete. People would stop "Googling" things because AI chatbots could just tell them the answers. Search -- the company's $200-billion-a-year cash cow -- was supposed to be doomed. On the one hand, the idea that people would no longer type queries into Google's search box and then click on the blue links that show up on results pages was a doomsday scenario. And AI chatbots certainly made that look increasingly likely. Then again, that story always assumed Google would sit still while the world around it changed. It assumed the company that practically invented the modern internet -- or at least the way most of us experience it -- wouldn't figure out how to adapt. On Wednesday, Alphabet, Google's parent company, reported its first-ever $100 billion quarter. Revenue rose 16 percent to $102.3 billion. Net income jumped 33 percent to $34.98 billion. Those are not the numbers of a company whose main business is being disrupted. It's more like the numbers of a company that's quietly figuring out how to change with the behavior of its users. Google Search and YouTube each grew at a double-digit pace. "Google Search & other" revenue climbed 15 percent to $56.6 billion. YouTube ads rose 15 percent to $10.3 billion. Combined, Google's advertising machine brought in more than $74 billion for the quarter. Not only that, but its cloud business grew by 35 percent over the previous year. That leads to the most interesting part of this story, which is the part about how Google is spending all that money. As it announced its earnings, Google said it would raise its capital expenditures, specifically as it invests in infrastructure to serve its cloud businesses. That's the part of the business that powers its AI ambitions. Google made more money than ever from search, and it's spending that money on AI. Training and running massive models requires staggering amounts of computing power. But that's exactly where Google's advantage lies -- it already owns what is probably the largest global computing infrastructure ever built. Now, it's doubling down. Alphabet expects to spend $91 billion to $93 billion in capital expenditures this year -- mostly on data centers, networking, and custom chips designed for AI workloads. That's up sharply from last year and puts Google in the same spending league as Amazon and Microsoft. And even with those huge investments, Alphabet's operating margin -- excluding a $3.5 billion European Commission fine -- rose to 33.9 percent. In other words, it's spending tens of billions to expand AI capacity while remaining one of the most profitable companies on the planet. Google's strategy isn't just about protecting search ads. It's about using the strength of that business to fund a transformation into something bigger: the dominant AI platform. That's still a big lift. Yes, Google is a household name, but it's still behind in AI -- at least in terms of consumer mindshare. OpenAI's ChatGPT is the front-runner in terms of customer adoption, but Google has almost every other advantage. It has the technology, the infrastructure, and a built-in user base that already trusts it as the default source of information. And because Google controls so many layers of the stack -- hardware, data centers, models, and consumer products -- it can absorb the cost of AI adoption in a way startups and rivals can't. It doesn't have to rent the future on someone else's platform; it's already building it. Now, Google is doing something very few companies have ever pulled off: funding its own disruption without losing momentum. Search and YouTube are still massive profit engines, generating the cash Google needs to build the infrastructure for AI. Basically, Google doesn't really care whether you type your queries into a search box or a chatbot window, as long as you keep asking it your questions. For all the hype about AI replacing search, this quarter makes one thing clear: Google's biggest business isn't dying. It's evolving into something that could be far more lucrative. If the company's $93 billion AI spending spree pays off the way Pichai expects, Google might have just figured out a better end of the story than search. Like this column? Sign up to subscribe to email alerts and you'll never miss a post. The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

Google parent Alphabet posts first $100 bn quarter as AI fuels growth

Google parent Alphabet reported its first-ever $100 billion quarterly revenue on Wednesday, powered by strong growth across its core search business and rapidly expanding cloud division that was buoyed by artificial intelligence. The cloud division, which competes with Amazon Web Services and Microsoft Azure, has become a key growth engine for Alphabet. Google parent Alphabet reported its first-ever $100 billion quarterly revenue on Wednesday, powered by strong growth across its core search business and rapidly expanding cloud division that was buoyed by artificial intelligence. The tech giant's revenues jumped 16 percent year-on-year to $102.3 billion in the third quarter, beating analyst expectations and marking a milestone for the company founded by Larry Page and Sergey Brin in 1998. "Alphabet had a terrific quarter, with double-digit growth across every major part of our business," said CEO Sundar Pichai in a statement. Net income surged 33 percent to $35 billion, with the company pointing to its ability to capitalize on the artificial intelligence boom that is reshaping the tech landscape. Google's core search and advertising business remained the primary revenue driver, generating $56.6 billion, up from $49.4 billion a year earlier. YouTube advertising revenues also grew strongly to $10.3 billion from $8.9 billion. But it was Google Cloud that stole the spotlight, with revenues soaring 34 percent to $15.2 billion. The cloud division, which competes with Amazon Web Services and Microsoft Azure, has become a key growth engine for Alphabet. The company's ambitious approach to offering AI "is delivering strong momentum and we're shipping at speed," Pichai said, highlighting the global rollout of AI features in Google Search and the company's Gemini AI models. The company said its Gemini App now boasts over 650 million monthly active users and that a growing amount of users were using the company's AI Mode for search queries. However, the results were partially overshadowed by a $3.5 billion fine imposed by the European Commission in September for competition law violations in its ad tech business. Excluding this penalty, operating income would have increased 22 percent instead of the reported nine percent, the company said. The strong performance comes as Alphabet ramps up capital spending to meet surging demand for AI infrastructure. The company now expects 2025 capital expenditures of between $91-$93 billion, reflecting massive investments in data centers and computing power to fulfill its AI ambitions. It said its spending on capex would grow even more next year, though without providing more details for now. Microsoft and Meta, which also posted results on Wednesday, showed similar massive expenditures on AI infrastructure, which consume more energy than conventional data centers, strain electric power grids and use local water resources for cooling. The company also reported having over 300 million paid subscriptions across services like Google One and YouTube Premium. Despite the robust growth, Alphabet's experimental "Other Bets" division, which includes autonomous vehicle unit Waymo, posted a loss of $1.4 billion on revenues of just $344 million. Google's shares have surged by nearly 40 percent in the thrid quarter, with investors also buoyed by the company's success in persuading a federal judge to deny a US government request that it sell off its Chrome browser as a solution in an antitrust trial. The judge was swayed by arguments that Google's world-dominating search engine - the heart of Google's business - faces stiff competition from ChatGPT and other AI chatbots like Perplexity. Still, Google's search revenue was up nearly 15 percent from the same quarter last year.

Alphabet's AI Bet Delivers Record $100 Billion Quarter, Cloud Backlog Surges To $155 Billion - Alphabet (NASDAQ:GOOGL)

Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) reported a stellar third quarter, achieving its first-ever $100 billion revenue quarter, signaling that the company's aggressive "full stack" approach to AI is now translating into significant financial gains across its core businesses. Check out GOOG's stock price here. AI Backlog Explodes To $155 Billion The standout performer was Google Cloud, which saw its AI-driven backlog surge by an astonishing 46% sequentially to $155 billion. This monumental increase underscores robust enterprise demand, with CFO Anat Ashkenazi highlighting that Cloud has signed more billion-dollar deals in the first nine months of 2025 than in the previous two years combined "Cloud had another great quarter of accelerating growth with AI revenue as a key driver," said Sundar Pichai, CEO of Alphabet, emphasizing the direct link between AI adoption and Cloud's success. Google Search Gets An 'Expansionary' AI Boost Google's foundational Search business is also experiencing an "expansionary moment" thanks to AI. AI Overviews and AI Mode are actively driving query growth, with AI Mode alone now boasting over 75 million daily active users globally. Pichai noted, "Our full stack approach to AI is delivering strong momentum and we're shipping at speed, including the global rollout of AI Overviews and AI Mode in Search in record time." This growth in user engagement, even for commercial queries, suggests that AI is enhancing, rather than cannibalizing, Google's advertising ecosystem. The results solidify venture capitalist Chamath Palihapitiya's statement that the generative AI race will ultimately be won by established tech incumbents, not new startups, citing their "massive distribution" as the decisive factor. In an X post on Oct. 20, he stated that Google Gemini "has a huge runway ahead of itself as their models and services become better." See Also: Alphabet Q3 Earnings: Revenue, EPS Top Estimates, Google Parent Raises CapEx Guidance On 'Strong Momentum' Across The Business YT Shorts Earn More Revenue Per Hour Than Traditional Video YouTube, another critical segment, reported a 15% increase in advertising revenue, with a significant milestone reached. YouTube Shorts now generates more revenue per watch hour than traditional in-stream video in the U.S. This addresses prior concerns about short-form content monetization. Alphabet Raises CapEx, Signaling 'Significant Increase' In 2026 To meet the escalating demand for its AI infrastructure and services, Alphabet announced a significant increase in its 2025 capital expenditures to between $91 billion and $93 billion, with a "significant increase" projected for 2026. This aggressive investment, including scaling NVIDIA GPUs and Google's own TPUs, demonstrates confidence in the long-term returns from its AI leadership. As Pichai concluded, "Our leadership in AI positions us so well for the opportunity ahead." GOOG Clocks Over 44% Returns In 2025 Shares of GOOG closed 2.51% higher at $275.17 apiece on Thursday and advanced by 6.73% in after-hours. The stock advanced 44.35% on a year-to-date basis and 56.22% over the year. It maintains a stronger price trend over the short, medium, and long terms, as per Benzinga's Edge Stock Rankings, with a poor value ranking. Additional performance details are available here. On Thursday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were lower. Meanwhile, on Wednesday, the S&P 500 index slipped 0.0044% to 6,890.59, whereas the Nasdaq 100 index rose 0.41% to 26,119.85. On the other hand, Dow Jones declined 0.16% to end at 47,632.00. Read Next: Chamath Palihapitiya Sees Current Tech Giants Having An Upper Hand In AI Wars: 'Google Has A Huge Runway' Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock GOOGLAlphabet Inc$292.956.69%OverviewGOOGAlphabet Inc$293.506.66%Market News and Data brought to you by Benzinga APIs

Google's CEO Pichai On Six Key Product Areas For Business Users As Quarterly Revenue Tops $100B

'We delivered our first ever $100 billion quarter. Five years ago, our quarterly revenue was at $50 billion. Our revenue number has doubled since then, and we are firmly in the generative AI era. In parallel, we've built for the long term and diversified with successful businesses in cloud, YouTube, and subscriptions. Our momentum is strong, and we are shipping at speed,' says Alphabet and Google CEO Sundar Pichai. For Google and its parent company Alphabet, the cloud and AI world have become resounding successes, helping drive double-digit growth across every major part of its business and giving the company its first quarter characterized by over $100 billion in revenue. Indeed, AI has become a key driver of real business results across Google, said Sundar Pichai, CEO of Alphabet and Google, during his prepared remarks on Wednesday during Alphabet's third fiscal quarter financial analyst conference call. "We delivered our first ever $100 billion quarter," Pichai said. "Five years ago, our quarterly revenue was at $50 billion. Our revenue number has doubled since then, and we are firmly in the generative AI era. In parallel, we've built for the long term and diversified with successful businesses in cloud, YouTube, and subscriptions. Our momentum is strong, and we are shipping at speed." [Related: Accenture CTO Jumps To Google Cloud To 'Accelerate' AI And Public Sector, CEO Says] Google's approach to AI spans a wide range of businesses from YouTube to Waymo autonomous driving, said Pichai. "Our full stack approach spans AI infrastructure, world class research, including models and tooling, and our products and platforms that bring AI to people everywhere," he said. Among the wide range of Google offerings, several stand out for their impact on business and the channel, including: Pichai provided updates on these and other offerings from the company. Here's a roundup of what he talked about in his own words. AI We are bringing AI to more people and developers than anyone else. In July, we announced that we processed 980 trillion monthly tokens across all our services. We are now processing over 1.3 quadrillion monthly tokens, more than 20x growth in a year. Phenomenal. This quarter, we took big steps to reimagine Chrome as a browser powered by AI through deep integrations with Gemini and AI mode in search, with more agentic capabilities coming soon. AI is driving an expansionary moment for search. As people learn what they can do with our new AI experiences, they're increasingly coming back to search more. Search and its AI experiences are built to highlight the web, sending billions of clicks to sites every day. During the Q2 call, we shared that overall queries and commercial queries continued to grow year over year. This growth rate increased in Q3, largely driven by our AI investments in search, most notably AI overviews and AI mode. Let me dive into the momentum we are seeing. As we have shared before. AI overviews drive meaningful query growth. This effect was even stronger in Q3 as users continue to learn that Google can answer more of their questions. And it's particularly encouraging to see the effect was more pronounced with younger people. We are also seeing that AI mode is resonating well with users in the U.S. We have seen strong and consistent week-over-week growth in usage since launch, and queries doubled over the quarter. Over the last quarter, we rolled out AI mode globally across 40 languages. In record time, it now has over 75 million daily active users. And we shipped over 100 improvements to the product in Q3, an incredibly fast pace. Most importantly, AI mode is already driving incremental total query growth for search. AI Infrastructure And GPUs Our extensive and reliable infrastructure which powers all of Google's products is the foundation of our stack and a key differentiator. We are scaling the most advanced chips in our data centers, including GPUs from our partner Nvidia, as well as our own purpose-built TPUs (Tensor Processing Units). And we are the only company providing a wide range of both. As we announced yesterday at Nvidia GTC, we are now shipping the new A4X Max instances powered by NVIDIA GB300 [GPUs] to our cloud customers. Our highly sought-after TPU portfolio is led by our seventh-generation TPU Ironwood, which will be generally available soon. We are investing in TPU capacity to meet the tremendous demand we are seeing from customers and partners, and we are excited that Anthropic recently shared plans to access up to 1 million TPUs. World-Class AI Research, Including Models and Tooling Our models are world leading. Gemini 2.5 Pro, Veo Genie 3, and our under viral sensation Nano Banana are among the very best in class. Over 230 million videos have been generated with Veo 3, and more than 13 million developers have built with our generative models. We're looking forward to the release of Gemini 3 later this year. Quantum Computing Last week, we announced that our Willow quantum chip achieved a major breakthrough, running an algorithm 13,000 times faster than one of the world's best supercomputers. And the result is verifiable, paving the way to future practical applications. Speaking of quantum, let me congratulate Michel Devoret, our chief scientist for quantum hardware. He received a Nobel in physics for early research he did in the 1980s. Three Nobels awarded to current Googlers in two years. Incredible. Google Cloud Our complete enterprise AI product portfolio is accelerating growth in revenue, operating margins, and backlog. In Q3, customer demand strengthened in three ways. One, we are signing new customers faster. The number of new GCP [Google Cloud Platform] customers increased by nearly 34 percent year over year. Two, we are signing larger deals. We have signed more deals [worth] over $1 billion through Q3 this year than we did in the previous two years combined. Third, we are deepening our relationships. Over 70 percent of existing Google Cloud customers use our AI products. ... As we scale, we are diversifying revenue. To date, 13 product lines are each at an annual run rate over $1 billion. And we are improving operating margins with highly differentiated products built with our own technology. This deep product differentiation starts with our AI infrastructure. We have a decade of experience building AI accelerators, and today offer the widest array of chips. ... It's why nine of the top 10 AI labs choose Google Cloud. We are also the only cloud provider offering our own leading generative AI models, including Gemini, Imagen, Veo, Chirp, and Lyria. Adoption is rapidly accelerating. In Q3, revenue from products built on our generative AI models grew more than 200 percent year over year. Over the past 12 months, nearly 150 Google Cloud customers each processed approximately 1 trillion tokens with our models for a wide range of applications. Gemini And Gemini Enterprise Our first party models like Gemini now process 7 billion tokens per minute via direct API use by our customers. The Gemini app now has over 650 million monthly active users, and queries increased by 3X from Q2. ... Earlier this month, we launched Gemini Enterprise, the new front door for AI in the workplace. And we are seeing strong adoption for agents built on this platform. Our packaged enterprise agents in Gemini Enterprise are optimized for a variety of domains, are highly differentiated, and offer significant out of box value to customers. We have already crossed 2 million subscribers across 700 companies.

Pichai Says Alphabet is 'Firmly in the Generative AI Era' | PYMNTS.com

"We are firmly in the generative AI era," CEO Sundar Pichai said on the conference call with analysts when the company posted third-quarter numbers after the bell. Double digit growth across several business lines, from search to ads to content, had the common underpinning of artificial intelligence (AI). Alphabet's third-quarter results underscored how its AI strategy is driving both growth and scale across its business. Google Cloud, which includes the company's AI infrastructure and generative AI solutions, saw revenues rise 34% to $15.2 billion, outpacing other divisions. The backlog has grown to $155 billion. Operating income for Cloud more than doubled to $3.6 billion from $1.9 billion a year earlier. First-party models like Gemini process 7 billion tokens per minute via direct API use from its customers, according to Pichai. The Gemini App now has more than 650 million monthly active users, and queries have tripled from Q2, Pichai said. AI is driving momentum in search, and AI Overviews are driving meaningful query growth, Pichai said. "Search and its AI experiences are built to highlight the web, sending billions of clicks to sites every day." Pichai said. "It's especially encouraging to see that the effect has been more pronounced with younger people." Enterprise remains a growth area in cloud, Pichai said, as the number of GPT customers increased by about 34% year over year. "We are signing larger deals," Pichai said of the cloud segment momentum, "as we've signed more deals over $1 billion in Q3 than in the previous two years combined." Revenues from products built on the company's generative AI models grew by 200%, Pichai said, year over year. The company has cross the 300 million mark in paid subscriptions, Pichai said, led by Google One and YouTube Premium. With a nod to YouTube Shorts, Pichai said that this business "earns more revenue per watch hour than traditional 'in-stream'" content. Philipp Schindler, CBO, said in his own remarks that Services revenues were $87 billion for the quarter, up 14%, tied to search and YouTube. Search and Other, as a category, was up 15% in revenues to $56.5 billion, with growth seen across all verticals, most notably retail and financial services. YouTube saw 15% growth in advertising revenues to $10.3 billion, driven by direct response. Schindler also pointed to shopping capabilities that have been added to AI Mode. "We've expanded try on capabilities to more clothing items, now available to anyone in the U.S. We're making it easier for consumers to benefit from deals through new loyalty offerings like personalized annotations in organic results and ads ... AI Max, he said, helps advertisers discover new customers at the exact moment they need a product or service," Schindler said. Anat Ashkenazi, CFO, noted that the $102.3 billion in consolidated top line, was up 15% year on year. Technology related costs of $14.9 billion were 8% higher than a year ago. "Other Bets" revenue was $344 million, and the operating loss in this segment was $1.4 billion. The company is devoting more resources to businesses including Waymo. During the question and answer session, analysts asked about agentic eCommerce. Schindler said, "This is all early, but we see agentic experiences, really, as additive to the way people seek information ... it helps people get stuff done and it helps businesses in the process. We're working on multiple agentic experiences across key verticals such as travel, commerce and shopping ... when we think of an agentic shopping future, it has to be one that benefits both the users and merchants," which he said comes from features like agentic checkout.