Google’s parent company Alphabet reported strong second-quarter earnings on Wednesday, beating market expectations. The company posted a profit of $28.2 billion on revenue of $96.4 billion, with CEO Sundar Pichai stating that artificial intelligence (AI) is playing a major role in the company’s success.
“We had a standout quarter, with robust growth across the company,” Pichai said. “AI is positively impacting every part of the business, driving strong momentum.”
Alphabet announced plans to increase its capital expenditures by $10 billion more than originally planned for this year, aiming to meet the rising demand for its cloud services. The tech giant expects to invest about $85 billion in 2025.
Revenue from Google Search saw double-digit growth, supported by the success of new AI features like AI Overviews and AI Mode. The company also reported continued growth in YouTube’s ad revenue and its subscription offerings.
Alphabet’s cloud business is projected to generate $50 billion in revenue this year, underlining strong demand in that segment. “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.
Following the earnings report, Alphabet’s shares rose nearly 2% in after-hours trading.
Investors have been watching closely to see how Alphabet balances its heavy spending on AI with profitability. One concern is whether AI-generated search summaries could reduce opportunities to show ads, a core part of Google’s revenue.
To address this, Google has started placing ads in its new AI Mode for search—a move aimed at keeping its ad business strong while competing with generative AI platforms like ChatGPT. While many generative AI tools avoid ads to maintain a smooth user experience, advertising continues to be the foundation of Google’s business.
“Google is doing well despite tariff headwinds and rising AI competition in search,” one analyst noted. “It’s also successfully monetizing AI Overviews and AI Mode, a good sign for the future.”
At the same time, Alphabet is facing serious legal challenges that could affect its business. In summer 2024, a U.S. federal judge ruled that Google used illegal methods to maintain its monopoly in online search. The Justice Department is now seeking changes that could reshape the internet landscape, including forcing Google to separate from its Chrome browser and banning exclusive deals that make its search engine the default on smartphones.
In a separate ruling this year, another judge found Google had built a monopoly in the online ad tech market by controlling the software and tools publishers use. If upheld, these decisions could lead to significant changes in how Google operates and reduce its power in the digital space.
Google is appealing both rulings.
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