Google parent Alphabet just dropped its Q2 earnings and plans to push its 2025 capital expenditures to $85 billion, up from the previous $75 billion target. This extra $10 billion is all about ramping up AI and cloud infrastructure.
Anat Ashkenazi, CFO, explained that Alphabet’s profit rose 19% this quarter, hitting $28.2 billion. Earnings per share also jumped 22% to $2.31. They pulled in $5.3 billion in free cash flow just this quarter and $66.7 billion over the past year. And now they “expect to invest approximately $85 billion in CapEx in 2025, up from a previous estimate of $75 billion. Our updated outlook reflects additional investment in servers, the timing of delivery of servers and an acceleration in the pace of data center construction, primarily to meet cloud customer demand.”
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With sales up nearly 32% this quarter, Google Cloud was the true standout, beating analysts’ predictions of a 26.5% growth. The increase in overall income was largely due to this growth. “With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures,” Pichai stated. He further noted that “cloud had another great quarter of strong growth in revenues, backlog and profitability. Its annual revenue run rate is now more than $50 billion.”
Pichai said that demand has been strong because Google offers a wide range of AI tools and services including making their AI models available on both GPUs and TPUs for customers. That mix is really what’s been driving growth, he explained, according to Reuters.
Pichai added, “AI Mode has launched in the U.S. and India and is going well, while AI Overviews now has over 2 billion monthly users across more than 200 countries and territories and 40 languages.”
Highlighting the significance and the contribution of the AI platform, Pichai said, “The Gemini app now has more than 450 million monthly active users, and we continue to see strong growth in engagement with daily requests growing over 50% from Q1.” He added, “We continue to expand our Gemini 2.5 family of hybrid reasoning models, which provide industry-leading performance in nearly every major benchmark.”
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Google’s AI-powered features in Search like AI Overviews and AI Mode are clearly doing their job. They’re keeping users engaged and helping the company stay ahead as chatbot rivals like ChatGPT gain traction. With these tools becoming a bigger part of how people search, Alphabet seems focused on making sure its core business doesn’t just keep up, but evolves with the AI wave.
Google’s Chief Business Officer, Philipp Schindler, revealed that Google Services pulled in $83 billion this quarter which is 12% more than the same time last year. That growth mostly came from strong performance in Search and YouTube. However, not everything went up as revenue from their ad network actually dropped a bit compared to last year. He also mentioned that Search did particularly well across all sectors, but retail and financial services stood out as the biggest contributors.