Alphabet Inc., the parent company of Google, reported stronger-than-expected second-quarter earnings, driven by double-digit growth in its core advertising and cloud computing businesses. The company also raised its capital spending forecast on artificial intelligence to a massive $85 billion, underscoring its commitment to dominating the AI infrastructure race.
According to a report by the Financial Times, Alphabet’s net income rose 19% year-on-year to $28.2 billion, beating analyst expectations of $26.6 billion. Revenue for the quarter hit $96.4 billion, exceeding the Visible Alpha consensus estimate of $94 billion.
The standout performer was Google’s search and advertising business, which grew 12% to $54.2 billion, well above forecasts for a 9% rise to $52.9 billion. The results come as a relief to investors amid concerns that AI-powered chatbots like OpenAI’s ChatGPT could threaten Google’s core search business.
To counter such threats, Google has rolled out new AI-integrated search experiences, including “AI Overviews” and “AI Mode.” These features are designed to replicate the conversational, answer-focused style of chatbots while preserving the monetization backbone of Google’s advertising model. So far, the features have not cannibalized ad revenues, signaling successful integration of AI without undermining existing revenue streams.
“We’re seeing strong adoption of our new AI features,” said CEO Sundar Pichai, adding that robust demand for Google’s AI-powered cloud infrastructure had further boosted growth. Cloud computing revenue surged 32% year-over-year to $13.6 billion, as companies continue ramping up investments in AI model training and deployment.
Alphabet is now planning to spend $85 billion on data centers, custom AI chips, and related infrastructure in 2025—$10 billion more than previously forecast and a dramatic increase from $53 billion last year. The company’s second-quarter capital expenditures nearly doubled, rising to $22.4 billion, surpassing analyst expectations of $18.2 billion.
The aggressive spending reflects Alphabet’s determination to maintain a technological edge in AI, particularly in competition with rivals such as Microsoft and Amazon Web Services, which have also ramped up investments in cloud-based AI platforms.
Despite a volatile year—marked by April’s market dip following renewed U.S.-China trade tensions—Alphabet shares have risen nearly 1% year-to-date, supported by the company’s resilient fundamentals and clear AI growth trajectory.
The results position Alphabet firmly among the leaders in the AI and cloud computing race, and demonstrate that the company is managing to innovate in generative AI without sacrificing its dominant role in online advertising.
