Alphabet outperforms Wall Street for Q1 2025 and unveils a $70 billion stock buyback. AI Overviews now serve 1.5 billion users monthly as Google accelerates the rollout.
Alphabet, Google’s parent company, reported Q1 2025 revenue of $90.23 billion and earnings of $2.81 per share—both beating analyst expectations. Shares jumped 4% in after-hours trading.
CEO Sundar Pichai pointed to the ongoing strength of Google’s core search business and stable ad revenues as key drivers of the quarter’s results. Google Cloud brought in $12.26 billion, reflecting 28% year-over-year growth—just under what analysts had anticipated, and down from the 30.1% growth rate in the previous quarter. It’s hard to say from the numbers alone whether this signals softening demand for AI or if Google is simply bumping up against its own capacity limits.
Search remains the engine that drives Alphabet’s business. Advertising revenue climbed 8.5% to $66.89 billion—accounting for about three-quarters of total revenue. Growth did taper off compared to the previous quarter, but the company still came out ahead of forecasts.
Alphabet’s capital spending hit $17.2 billion for the quarter, up 43% year-over-year. The company expects annual capex to reach $75 billion, with major investments going toward data centers, AI hardware, and server infrastructure.
AI Overviews reach 1.5 billion users per month as company expands rollout
Google is ramping up its use of AI-generated answers in search, now reaching around 1.5 billion people every month. Sundar Pichai flagged this as a top priority, emphasizing that Google is "leaning in heavily" on expanding the feature to "new countries, for more users and for more search queries."
The push comes as Google faces mounting pressure from LLM-powered search rivals like ChatGPT and Perplexity. The idea behind AI Overviews is to deliver quick, summarized answers to complex questions—helping users get what they need without digging through multiple links. But recent data suggests this convenience is coming at the expense of traffic to the very sites that supply the information.
Google is also piloting a full-on redesign of search called "AI Mode," which lets users enter multimodal prompts. According to Pichai, people type out AI Mode prompts that are twice as long as standard search queries.
Visual search tools are getting a boost as well. Circle to Search now runs on more than 250 million devices, with usage up nearly 40% over the last quarter.
Gemini 2.5 Pro expands Google’s AI footprint
Active users on Google’s AI Studio and the Gemini API—mostly developers—have jumped by over 200% since the start of the year, tracking alongside the launch of Gemini 2.5 Pro. The model has earned strong marks in benchmarks and in the real world. Google also rolled out Gemini 2.5 Flash, targeting developers who need faster, more affordable AI.
Gemini models are now built into 15 different Google products, each with over 500 million users. This includes Android, Pixel, and other consumer devices where features like Gemini Live Camera and screen sharing are available. The Gemini chatbot alone is seeing 350 million monthly active users, according to Google.
On the multimodal side, Google is rolling out new models for image and video: Imagen 3 for images and Veo 2 for video. Meanwhile, the company’s open-source Gemma models have been downloaded more than 140 million times, according to Pichai.
Outside of software, Alphabet’s robotaxi subsidiary Waymo is scaling up operations. The company now delivers more than 250,000 paid rides per week—a fivefold increase over last year—putting Waymo among the few operators of AI-powered robotaxi fleets at serious scale.
