Alphabet (GOOG.US, GOOGL.US) first quarter revenue and profits exceed expectations, driven by AI and cloud computing performance growth.

Alphabet Inc., the parent company of Alphabet (GOOG.US, GOOGL.US), announced its first quarter financial results for 2025 after the market closed on Thursday, revealing that the company's overall performance exceeded market expectations and drove the stock price up by over 5% in after-hours trading. Alphabet reported revenue of $90.23 billion for the quarter, surpassing analysts' expectations of $89.12 billion, and earnings per share (EPS) of $2.81, significantly higher than the expected $2.01. While the overall performance was strong, YouTube advertising revenue came in at $8.93 billion, slightly lower than the expected $8.97 billion, and Google Cloud revenue was $12.26 billion, also slightly below the market's expectation of $12.27 billion. However, both business segments continued to show strong growth, with year-over-year increases of 8.5% and 28%, respectively. Alphabet's advertising business continued to exhibit strong growth momentum, with total advertising revenue reaching $66.89 billion, an increase of 8.5% year-on-year. The "Search and Other" business segment, in particular, performed well with revenue of $50.7 billion, a 9.8% increase from the same period last year. Additionally, Alphabet's AI tool, "AI Overviews," has now attracted 1.5 billion monthly active users, a significant increase from 1 billion users in October last year, providing strong support for the search business. However, Alphabet's Chief Business Officer Philipp Schindler warned that the global macroeconomic environment remains uncertain. He pointed out that the U.S. government is set to end the "low-value parcel tax exemption policy," which could impact advertising spending from retailers in the Asia-Pacific region, putting pressure on advertising revenue in 2025. In terms of profits, Alphabet's net profit for the quarter reached $34.54 billion, a 46% increase year-on-year, with earnings per share rising from $1.89 to $2.81. The company stated that part of the growth stemmed from an unrealized gain of $8 billion from non-marketable equity investments in a privately held company. In the cloud computing business, while Google Cloud revenue slightly missed expectations, the impressive 28% year-over-year growth performance is still notable. Additionally, the department's operating profit margin significantly increased from 9.4% last year to 17.8%, demonstrating its strong competitiveness in the industry. Alphabet also announced a $32 billion cash acquisition of the cybersecurity company Wiz, the largest acquisition in the company's history, surpassing last year's $22 billion proposed acquisition of the same company. The acquisition of Wiz will help Alphabet further enhance its cloud security products and drive secure solutions in multi-cloud environments to meet the growing demands of customers. In the field of autonomous driving, Alphabet's subsidiary Waymo continues to expand its business, currently offering over 250,000 fully automatic paid passenger rides in multiple cities, an increase from last year. However, despite significant technological progress, the "Other Bets" segment where Waymo operates continued to incur a loss of $1.23 billion this quarter, with the loss expanding from last year. In addition, Alphabet announced plans to maintain $75 billion in capital expenditures and initiated a $70 billion stock buyback program once again. This move demonstrates the company's strong cash flow and sustained commitment to shareholder returns.