Alphabet Inc., the parent company of Google, delivered robust quarterly earnings that exceeded Wall Street expectations, driven by significant growth in its cloud computing division and increased demand for its artificial intelligence (AI) tools and services.

The tech giant reported revenue of $84.2 billion for the first quarter of 2025, marking a 15% year-over-year increase, with net income surging to $25.6 billion, a sharp rise from $17.4 billion in the same period last year. The company credited much of this growth to its Google Cloud unit, which has become a key driver of its expanding revenue stream.

Cloud Segment Reaches Profitability Milestone

Google Cloud posted $11.8 billion in revenue, up nearly 28% from the previous year. This marks the sixth consecutive quarter of profitability for the cloud unit, which had long operated in the shadow of Amazon Web Services (AWS) and Microsoft Azure.

“Customers across industries are turning to Google Cloud to modernize their infrastructure and accelerate their use of generative AI,” said Alphabet CEO Sundar Pichai during the earnings call. “We are just beginning to unlock the potential of AI for enterprises, and our cloud platform is at the heart of that transformation.”

AI Services Gain Traction Across Alphabet’s Ecosystem

Alphabet’s strategic focus on artificial intelligence also played a pivotal role in this quarter’s success. The integration of its AI models, particularly Gemini (formerly Bard), into a wide range of products — from Google Workspace tools to Search and Android — has deepened user engagement and opened new commercial pathways.

Pichai noted that over 70% of Google Cloud’s top 100 enterprise customers are now actively deploying AI-driven tools within their organizations. These include generative AI applications for content creation, data analysis, customer support, and internal productivity enhancements.

In particular, the launch of Gemini 2.5, the latest version of Google’s AI model, has been well received, with early adopters praising its improved contextual understanding and real-time integration capabilities.

Advertising Revenue Remains Solid

While cloud and AI stole the spotlight, Alphabet’s core advertising business remained a strong contributor, bringing in $61.7 billion in revenue, a 9% increase from the same quarter last year. YouTube advertising rose by 12%, reflecting higher viewer engagement and better monetization of Shorts, its TikTok competitor.

Google Search continued to be the backbone of Alphabet’s ad engine, thanks to improvements in AI-powered search experiences and shopping features that enhance user personalization.

Investors React Positively

Following the earnings release, Alphabet’s shares rose over 8% in after-hours trading, reflecting investor confidence in the company’s long-term AI roadmap and its successful pivot to high-margin cloud services.

Industry analysts applauded Alphabet’s strong performance, especially as competitors in the tech sector face margin pressure and slowing growth in key areas. “Alphabet is showing it can diversify beyond advertising and build a sustainable future around cloud and AI,” said Karen Liu, senior analyst at MarketGrid Research.

Looking Ahead

Alphabet executives said they expect continued momentum in cloud and AI adoption throughout the year. The company plans to invest further in AI infrastructure, data centers, and talent to support the scaling of its generative AI services across more industries.

“We are committed to making AI helpful for everyone — responsibly and at scale,” Pichai said.

Alphabet’s next big milestone will be its annual developer conference, Google I/O, scheduled for May 2025, where the company is expected to unveil new AI capabilities, cloud tools, and consumer hardware innovations.