Earnings

Alphabet Q3 2025 Earnings | Core-Brief

30 Oct 2025 — 2 min read

1) Headline

Alphabet posted its first-ever $100B+ quarter: $102.3B revenue, +16% y/y (15% cc).
AI is no longer a story, it’s a revenue engine across Search, Cloud, YouTube and Subscriptions.
Operating income $31.2B; margin 30.5% (would’ve been ~34% ex-EC fine).

2) AI is the growth accelerant

Google now processes 1.3 quadrillion tokens per month across surfaces (up from 980T in July).
Gemini app: 650M MAU, queries 3x vs Q2.
AI overviews now at 2B+ users, AI Mode at 75M DAU across 40 languages — and Sundar said clearly: AI is driving incremental query growth, especially among younger users.
That’s the key: more queries → more commercial intent → more ad supply.
Google is pushing an agentic future (AI doing the shopping/travel/action). They’re positioning Google as the trusted layer for agent-to-merchant payments.

3) Search & Ads (still the cash machine)

Search & Other: $56.6B, +15% y/y — growth across all major verticals, with retail and financials leading.
AI is already monetizing: ads now sit below and inside AI overviews; Google says monetization is running at “approximately the same rate” as classic search for now.
New product AI Max in Search (rolled out globally in Sept) is already used by hundreds of thousands of advertisers and “unlocked billions of net new queries” in Q3 — that’s Google telling you AI is expanding ad inventory, not cannibalizing it.
YouTube Ads: $10.3B, +15% — direct response the main driver; retail is strong; Shorts now earn more revenue per watch hour than traditional instream in the US.

4) Cloud — AI flywheel is real

Google Cloud revenue: $15.2B, +34%.
Cloud operating income: $3.6B, margin 23.7% (up from 17.1%).
Backlog: $155B — up 46% q/q and 82% y/y because AI infra demand is crazy.
9/10 top AI labs run on GCP; Anthropic plans to access up to 1M TPUs.
13 different Cloud products are now $1B+ run-rate — so it’s not just “Gemini for enterprise,” it’s a broad platform.
They said plainly: demand > supply through Q4 and 2026 → hence huge capex.

5) Capex & infra

Q3 capex: $24B (mostly AI infra).
2025 capex guide raised to $91–93B (from $85B).
2026 capex: “significant increase” coming — i.e. AI buildout is multi-year, not peaking.

6) Subscriptions

Alphabet crossed 300M paid subs (Google One + YouTube Premium/TV leading).
YouTube’s model is now clearly “twin engine”: ads plus subs. A Premium user generates more gross profit than an ad-only user.

7) Strategic themes they hammered

AI is expansionary for Search — not a replacement.
Agentic commerce will need: authenticated agents, merchant-ready flows, and a trust/chargeback trail → Google wants to be the standards + payments layer.
Custom silicon (TPU Ironwood) + broad GPU choice is the differentiator vs other hyperscalers → better AI unit economics over time.

8) What to watch into Q4 / 2026

Q4 ads comps will be tough because of 2024 US election spend, especially on YouTube.
Depreciation will accelerate (AI infra).
Still a tight supply environment for AI chips despite faster data center builds.