Google's AI push pays off with solid second quarter, but doubts about
company's future persist
[July 24, 2025] By
MICHAEL LIEDTKE
SAN FRANCISCO (AP) — Google’s accelerating shift into artificial
intelligence helped propel its corporate parent to another quarter of
solid growth while a crackdown on its internet empire looms in the
background.
The results released Wednesday for the April-June period provided the
latest sign that Google is deftly navigating the technological
landscape’s tilt toward AI while still capitalizing on well-worn
techniques that have made it the internet’s main gateway for the past
quarter century.
That balancing act helped Google parent Alphabet Inc. earn $28.2
billion, or $2.31 per share, during the second quarter, a 19% increase
from the same time last year. Revenue climbed 14% from a year ago to
$96.4 billion. Both figures easily eclipsed analysts' projections.
“We had a standout quarter, with robust growth across the company. We
are at the leading frontier of AI," Alphabet CEO Sundar Pichai boasted.
But Google's aggressive push into AI is forcing Alphabet to dig even
deeper into its coffers to pay for the data centers, chips and other
components required to power the technology, prompting the Mountain
View, California, company to raise its budget for capital expenditures
by an additional $10 billion to $85 billion.
That spending increase disclosed in the quarterly report initially
spooked investors, causing Alphabet's stock to dip in Wednesday's
extended trading, despite the financial gains that appear to be flowing
from the AI investments. But as Alphabet executives elaborated on
Google's AI progress and made other reassuring remarks during a
Wednesday conference call, the stock price reversed course and rose by
more than 2% in extended trading.
Google is upping the ante as part of its effort to fend off intensifying
competition from AI startups such as OpenAI's ChatGPT and Perplexity.
Besides those threats, a federal judge who declared Google's search
engine to be an illegal monopoly is now weighing a range of
countermeasures that include requiring the sale of its popular Chrome
browser.
The performance covered a stretch that saw Google bring even more AI
technology into its search engine in an effort to maintain its
dominance, including the May release of its own version of a
conversational answer engine called AI Mode.
That addition supplemented its more than year-old use of extensive
summaries called AI Overviews that Google now frequently highlights at
the top of its results page while decreasing the number of its
traditional links to other websites.
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Audience members gather at Made By Google for new product
announcements at Google on Aug. 13, 2024, in Mountain View, Calif.
(AP Photo/Juliana Yamada, File)
 The shake-up has resulted in even
more interaction with Google’s search engine and steady earnings
growth to support Alphabet’s $2.3 trillion market value, said Jim
Yu, chief executive of BrightEdge, a firm that analyzes search
trends.
Google's search-driven ad revenue totaled $54.2 billion in the past
quarter, a 12% increase from the same time last year.
“All this AI stuff is not slowing Google down, they are doing a very
good job of evolving with the times,” Yu said.
The AI boom has also been fueling demand in Google’s Cloud division
that sells computing power and other services. Google Cloud
continued to thrive in the past quarter with revenue rising 32% from
a year ago to $13.6 billion. The division is under pressure to
deliver robust growth from investors to help justify Google’s huge
investments in AI technology.
While Google seems to be making a relatively smooth albeit expensive
transition into the AI age, it still could be jolted by the
denouement of an antitrust case brought by the U.S. Justice
Department nearly five years ago. Besides considering a possible
breakup of Google, U.S. District Judge Amit Mehta is also
considering whether to ban the deals that Google has been making for
years to lock itself in as the go-to search engine on smartphones
and personal computers in addition to forcing it to share much of
the data that it has accumulated about people's queries with its
rivals. The judge has indicated he will issue a ruling before Labor
Day.
Although Google plans to launch an appeal after Mehta’s ruling, the
cloud of uncertainty has weighed on Alphabet’s stock while other
tech giants betting big on AI such as chip maker Nvidia, Microsoft
and Meta Platforms have seen their market values soar. Alphabet's
shares ended Wednesday's regular trading session up by less than 50
cents so far this year.
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