Alphabet Surpasses Expectations with 13.8% YoY Revenue Growth, Strong Cloud and YouTube Performance

Alphabet reported Q2 results with revenue and EPS beating expectations, driven by gains in Search, YouTube, and Cloud. Total revenue rose 13.8% YoY to $96.4bn, while EPS reached $2.31. The company raised its 2025 capex guidance by $10bn to $85bn to support AI infrastructure investments. Paid click growth reaccelerated to 4%, and analysts raised their price targets, calling Alphabet an "AI winner." Shares were up around 1.1% in afternoon trading.

Alphabet Inc. (GOOGL), the parent company of Google, reported its second quarter (Q2) 2025 earnings, which exceeded analysts' expectations. The company's total revenue rose by 13.8% year-over-year (YoY) to $96.43 billion, while earnings per share (EPS) reached $2.31, both figures beating the Wall Street estimates [2]. The company's strong performance was driven by robust growth in its Search, YouTube, and Cloud segments.

The revenue growth was primarily attributed to the adoption of AI features, which expanded usage in Google Search and increased user engagement. The introduction of AI-powered tools in YouTube, such as AI Overviews and auto-dubbing, also contributed to the platform's growth. Additionally, Google Cloud's revenue and profitability saw significant improvements, driven by rising enterprise demand for AI products and infrastructure [2].

Alphabet raised its 2025 capital expenditure (capex) guidance by $10 billion to $85 billion to support ongoing investments in AI infrastructure. The company expects these investments to meet persistent demand in its Cloud and other AI-driven businesses. However, the increased capex is expected to pressure margins due to higher depreciation and operating expenses [2].

The company's stock price reacted positively to the earnings report, with shares up around 1.1% in afternoon trading. Analysts have raised their price targets for Alphabet, calling it an "AI winner" due to its strong performance in AI-driven segments. Goldman Sachs analyst Eric Sheridan maintained a Buy rating on Alphabet with a $234 price target, citing the company's AI scale and cloud momentum [3].

In conclusion, Alphabet's Q2 2025 earnings report highlights the company's continued growth driven by AI investments and strong performance across its core businesses. The increased capex guidance reflects Alphabet's commitment to supporting its AI infrastructure and meeting customer demands. As the company looks ahead, it will be closely monitored for its ability to maintain margin discipline amid increased spending and legal costs, as well as its ability to drive further growth through AI product adoption and monetization.

References:
[1] https://uk.finance.yahoo.com/news/earnings-live-intel-stock-slides-amid-cost-cuts-deckers-soars-as-hoka-ugg-shoes-see-gains-115710374.html
[2] https://markets.financialcontent.com/wral/article/stockstory-2025-7-25-googl-q2-deep-dive-ai-investments-drive-growth-across-search-cloud-and-youtube
[3] https://www.benzinga.com/analyst-stock-ratings/reiteration/25/07/46638272/googles-ai-power-play-goldman-says-buy-as-cloud-youtube-search-drive-big-upside