Google Q1 Earnings Recap
Google was the first major tech company to report earnings this quarter. Below are the main highlights:
- Revenue: $90.2 billion, +12% YoY
- Net income: $2.81 per share, +49% YoY
- Search revenue: $50.7 billion, +10% YoY
- $70 billion share buyback and a 5% increase to dividend
Resilient Google Search Results
Google Search and other segments brought in $50.7 billion in revenue, beating Wall Street expectations by 0.8%. The market anticipated a slowdown in search revenue due to reduced retailer ad spend amid economic uncertainty from trade wars. However, recent performance indicates that Google is outpacing expectations. On top of this, Google has rolled out its own take on AI in search by launching AI Overviews and AI Mode.
Google Services Revenues Q1 2025, source: alphabet investor relations
YouTube and Cloud Performance
YouTube revenue from ads was somewhat weak at $8.9 billion — a 10% year-over-year increase — investors were expecting stronger growth on the YouTube front. In contrast, Google Cloud posted robust results with operating profits amounting to $2.18 billion, thus exceeding expectations of $1.94 billion. Google Cloud continues to be the third-largest cloud provider following Amazon Web Services and Microsoft Azure.
Total revenue for Google Cloud increased 28% year-over-year to $12.8 billion, reflecting increasing demand for computing power, especially for AI-based workloads.
Google Cloud Revenues Q1 2025, source: alphabet investor relations
Capital Expenditures and Spending Plans
Analysts anticipated a slowdown in AI spending driven by cuts in corporate capital expenditures. However, Google reaffirmed its $75 billion guidance for 2025 capital spending. This confirmation is seen as a positive catalyst for providers of AI infrastructure, such as Nvidia, Supermicro and others.
Important considerations in Earnings
Alphabet's first-quarter results were significantly aided by an $8 billion unrealized profit from its stake in a private company that contributed immensely to the company's overall bottom line. Although Alphabet has not disclosed the company's name, major news outlets have reported it to be Elon Musk's SpaceX, which is currently valued at approximately $350 billion. In 2015, Alphabet and Fidelity Investments together invested $1 billion in SpaceX, acquiring a combined 10% stake in the company.
It’s worth noting that even without the unrealized gain, Alphabet’s net income per share would be $2.16—still beating Wall Street’s forecast of $2.01.
Stock Performance
Google's stock surged to $170 in pre-market trading but later gave up those gains, finishing the day up 1.47% at $163.85. As of this writing, the stock has dropped 14% year-to-date. Stay with us for ongoing coverage and updates on the latest developments and outlook.
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