Alphabet Inc. posted better-than-expected earnings for Q2 2025, underlining the company’s accelerating push into artificial intelligence and cloud computing. The tech conglomerate reported $90.7 billion in revenue, up 14% from a year earlier, with earnings per share at $2.31, beating Wall Street forecasts of $2.16, as reported by MarketWatch.
CEO Sundar Pichai credited Alphabet’s Q2 continued innovation in generative AI — particularly through its Gemini model — as a driving force behind this quarter’s success. Google Cloud revenue climbed 26% to $11.9 billion, as enterprises increasingly seek AI-powered solutions. Analysts highlighted that, unlike competitors still experimenting, Google is commercializing AI at scale — embedding it into Search, Ads, Workspace, and Cloud.
The company’s AI-driven product ecosystem is now firmly a growth engine. Pichai emphasized that the rollout of AI features across its consumer and enterprise platforms is “creating real value for users and customers alike.”
Market Reacts to Capex Surge Despite Strong Fundamentals
Despite the financial beat, Alphabet’s Q2 stock slid nearly 6% in after-hours trading, according to Bloomberg. The dip came after the company raised its full-year capital expenditure forecast to over $50 billion, up from a prior projection of $48 billion. Q2 capex alone hit $12 billion, up sharply from $8.9 billion in Q1.
This increased spending is largely attributed to infrastructure investments in data centers and custom-built AI chips — critical components to support Google’s growing AI demand. CFO Ruth Porat, in her final earnings call before assuming a new role, defended the strategy, stating the investments are essential for long-term AI leadership.
Still, investors appeared cautious. Concerns centered around whether Alphabet’s Q2 heavy AI infrastructure spending could pressure margins and cash flow in the near term. Market watchers suggest the sell-off reflects uncertainty around the scale and speed of AI monetization.
Analysts Say Google Is Gaining Ground in the AI Race
According to a Wall Street Journal report, many analysts believe Alphabet is now firmly positioned among the AI frontrunners, if not leading the pack. Unlike rivals who are showcasing AI demos, Google is embedding AI deeply across product lines, directly generating revenue from its innovations.
Advertising also remained strong, with Search and YouTube contributing to $65.5 billion in ad revenue, reaffirming the resilience of Alphabet’s core business.
Analysts at Jefferies and Bernstein noted that while capex fears caused a short-term dip, the company’s long-term prospects appear increasingly solid. Google’s blend of innovation, execution, and ecosystem-wide AI integration could allow it to outpace competitors as AI reshapes the tech landscape.
In summary, Alphabet’s Q2 performance underscores a pivotal moment: Google is no longer just participating in the AI race; it’s actively defining it.
