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Home » AI search war? Google is still dominant as Alphabet’s revenue jumps from 46% to $90 billion
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AI search war? Google is still dominant as Alphabet’s revenue jumps from 46% to $90 billion

userBy userApril 25, 2025No Comments5 Mins Read
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Despite fear that AI-powered search engines could erode Google’s advantage, the Alphabet crushed expectations in the first quarter, delivering an overwhelming message.

In the latest quarter, Alphabet surprised Wall Street with a 46% profit spike and an incredible $90 billion in revenue. The AI ​​search war may be intensifying, but Google continues to dominate, beating expectations across the core search and advertising business. Far from being abdicated by the new AI challenger, Google’s revenue engine, including YouTube and Cloud, helped drive one of the most impressive quarters of all time.

Alphabet’s blowout performance showed that all the stories of Google’s downfall were premature. Despite AI competitors flooding the search space, Alphabet’s grip remains solid, offering significant profits and signing off for an additional $70 billion in stock buyback. While financial, healthcare, travel and retail advertisers have driven strong quarters, Google’s AI overview tool has reached over 1.5 billion users each month. In the future competition of search, the alphabet revealed it: innovation may surge, but domination does not easily fall apart.

A threat to AI? It’s not even nearby. Alphabet’s $90 billion blowout has Google dominated the AI ​​search competition

According to CNBC, Google and YouTube parent Alphabet reported stronger than expected first-quarter growth on Thursday after Bell. Stocks rose more than 5% in after-hours trading, according to CNBC.

Here’s how the alphabet was performed compared to the analyst expectations from LSEG:

Includes other key numbers for the report.

YouTube ad revenue: $8.930 billion vs. $8.97 billion

Google Cloud Revenue: $12.26 billion vs. $12.27 billion is expected

Transportation Acquisition Cost (TAC): Expected to $13.75 billion vs $13.666 billion

According to the latest revenue report, Alphabet’s search and advertising business continues to grow steadily despite the growing competition for AI. Overall revenue has grown 12% from a year ago, breaking the 10% growth forecast by Wall Street.

Google’s AI overview reached 1.5 billion users every month

YouTube ad revenue fell below expectations of $8.93 billion, but overall ads brought in $668.9 billion, an 8.5% increase from the previous year. The “Search and Other” segment recorded revenue of $50.7 billion, up nearly 10% from the previous year. Alphabet said that the AI ​​summary, the top AI feature in Google’s search results, serves 1.5 billion users per month, starting from 1 billion in October. In August 2024, Google introduced the “AI Overview,” also known as SGE (Search Generic Experience).

Google’s business chief Philip Schindler said the company was “unaffected by the macro environment,” noting that President Donald Trump’s decision to close the loophole in DE Minimis Trade “will be slightly headed towards the advertising business in 2025, primarily from APAC-based retailers.”

The De Minimis exemption allows shipments under $800 to enter the US without duties. This is a major factor that has been heavily promoted online for e-commerce players like Temu and Shein. That loophole is set to close on May 2nd.

“I think we have had a lot of experience through uncertain times, and we are focused on helping our customers by providing deep insight into the changes in consumer behavior associated with their business,” Schindler added.

Finance, retail, healthcare and travel stood out as strong sectors driving the growth of Google’s ads this quarter, he said.

Alphabet’s net income was between 46% and $34.54 billion, or $2.81 per share, compared to the previous year’s $23.66 billion, or $1.89 per share. This total included $8 billion of unrealized returns related to Alphabet’s investment in private companies. According to LSEG, Alphabet’s adjusted earnings were $2.27 per share and $2.27 per share, surpassing analyst expectations.

Google Cloud reported revenue of $12.26 billion, down from its $12.27 billion forecast. However, the units increased 28% year-on-year, significantly improving their margins, reaching 17.8% compared to 9.4% a year ago.

In a massive move this quarter, Alphabet agreed to acquire $32 billion cybersecurity startup WIZ for nearly $10 billion more than it was offered in 2024. The company is expected to have regulatory approval pending next year. CEO Sundar Pichai said the acquisition will help strengthen Google Cloud’s security products, saying, “I think this will help our customers increase what they want.”

Outside of the core business, Alphabet’s “other bets” segment, including Waymo, generated revenue of $450 million, down 9% from the previous year. The unit recorded a loss of $1.23 billion, expanding from $1.02 billion the previous year.

Waymo’s autonomous driving units show signs of scaling. The company currently offers over 250,000 fully autonomous paid rides a week in San Francisco, Los Angeles, Phoenix and Austin.

“Waymo continues to build on impressive technical achievements to rapidly expand and develop sustainable business models,” said Ashnekenazi, chief financial officer of Alphabet, during the call to revenue.

Ashkenazi also said Alphabet is planning to invest around $75 billion in capital expenditures this year, but said spending could depend on delivery and construction schedules.

The Alphabet board approved an additional $70 billion in share buyback, consistent with the amounts certified last year.

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