Alphabet Q1 earnings: key takeaways and impact

Alphabet just dropped its first‑quarter numbers for 2025 and the data is sparking a lot of chatter. If you’re wondering whether Google’s ad business is still the engine, how the cloud segment performed, or what the earnings call hinted at for the rest of the year, you’re in the right spot. Below we break down the most important figures, why they matter, and what you can watch for next.

Revenue breakdown by segment

First off, total revenue climbed to $78.5 billion, a 7% rise from the same quarter last year. The bulk of that growth came from advertising, which posted $54 billion – up 6% YoY. Search ads kept their lead, but you’ll see a noticeable bump in YouTube ad revenue, now at $9.2 billion after a 12% jump.

Cloud services are the next big story. Google Cloud reported $9.5 billion in revenue, a solid 14% increase. The growth is driven by more enterprise customers and a broader AI‑powered suite. While the cloud margin is still lower than the ad side, the upward trend is a sign that Alphabet is diversifying its income.

Other bets, like Waymo and Verily, together contributed under $1 billion and remain a small slice of the pie. Their loss numbers are still sizable, but they’re expected to shrink as the projects mature.

What investors should watch

One of the headline numbers from the earnings call was the earnings‑per‑share (EPS) of $1.23, beating the consensus estimate of $1.18. That was helped by a lower tax rate and some cost‑saving measures in the data‑center ops.

However, the cost of staying ahead in AI is rising fast. Alphabet said R&D spend rose 18% to $6.2 billion. Investors need to weigh that spend against the projected revenue lift from new AI tools across Search, Ads, and Cloud.

Another point to keep an eye on is the “Google Services” segment, which includes Search, YouTube, and Android. The segment’s operating margin slipped to 27% from 28% last year, mainly because of higher content costs for YouTube and increased spending on AI‑related infrastructure.

Finally, the outlook for Q2 includes guidance for revenue of $79‑81 billion and EPS of $1.25‑$1.30. The range reflects uncertainty around ad spend in a potentially slowing global economy, but also confidence that AI‑driven products will keep the growth engine humming.

Bottom line: Alphabet’s Q1 earnings show a healthy ad business, a rapidly expanding cloud arm, and a willingness to pour money into AI. If you’re tracking the stock, watch the margin trends in Google Services, the cloud growth rate, and how quickly AI investments translate into higher ad rates. Those three factors will shape whether Alphabet can keep its growth momentum through the rest of the year.

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