Alphabet’s first quarter financial results have pleased Wall Street, despite the search engine gaint’s continued cost cutting and possible breakup of its business.
Google parent Alphabet posted strong Q1 growth in both profits and revenues, as its heavy AI investments help drive revenue increases for Google Search, Cloud, YouTube, advertising and subscriptions.
Despite the solid fiscal performance, CEO Sundar Pichai is still facing a number of notable challenges.
The most pressing are now two possible breakup threats to its business, after a landmark ruling last August that that Google’s search business constituted an illegal monopoly.
Image credit: Brett Jordan/Unsplash
Q1 financials
The headache for Pichai deepened in this month, when another judge ruled that Alphabet held an illegal monopoly in advertising technology.
This is potentially more serious for Pichai, as Google’s ad business accounts for nearly 75 percent of the company’s total revenue.
So it is perhaps important then that Alphabet was able to deliver some good news for investors, after recent Wall Street disappointment over its Q4 and FY2024 financial results.
For the first quarter ending 31 March, Alphabet posted a net profit up 46 percent of $34.5bn (£25.9bn), up from $23.7bn (£17.8bn) in the first quarter of 2024.
Revenues rose 12 percent to $90.2bn (£67.8bn) from $80.5bn (£60.5bn) in the same year ago quarter. This was more than Wall Street’s 10 percent expectations of $89.1bn.
Alphabet’s share price rose over 5 percent in premarket trading on Friday and is currently up 2.4 percent at $161.47 at midday Friday.
“Healthy growth”
“We’re pleased with our strong Q1 results, which reflect healthy growth and momentum across the business. Underpinning this growth is our unique full stack approach to AI,” said Pichai.
Google chief executive Sundar Pichai speaks at Google I/O 2016. Image credit: Google
“This quarter was super exciting as we rolled out Gemini 2.5, our most intelligent AI model, which is achieving breakthroughs in performance and is an extraordinary foundation for our future innovation.”
“Search saw continued strong growth, boosted by the engagement we’re seeing with features like AI Overviews, which now has 1.5 billion users per month,” said Pichai. “Driven by YouTube and Google One, we surpassed 270 million paid subscriptions. And Cloud grew rapidly with significant demand for our solutions.”
Unit breakdown
Google Search saw Q1 revenues up at $50.7bn, compared to $46.1bn in Q1 2024; YouTube ads brought in $8.9bn in Q1 2025 from $8bn in Q1 2024 (likely down to a notable rise in the number of ads now appearing in YouTube videos); Google Network Q1 revenue declined slightly to $7.2bn from $7.4bn in Q1 2024; Google Advertising Q1 revenue was $66.9bn compared to $61.6bn in Q1 2024; and Google subscriptions, platforms and devices revenue rose to $10.4bn from $8.7bn in Q1 2024.
Google’s “Other Bets” recorded revenue down 9 percent at $450m in Q1 2025, from $495m in Q1 2024.
Alphabet stated it had 185,719 staff as of 31 March 2025, an increase from the 180,895 staff at 31 March 2024.
