Alphabet reported a record Q3 2025, exceeding $100 billion in quarterly revenue for the first time at $102.3 billion, a 16% year-on-year increase, propelled by double-digit growth across all core businesses including Search, YouTube, and Cloud. This robust performance is attributed to the extensive commercialization and deep integration of AI, with AI-related revenue in Google Cloud reaching billions per quarter and enterprise AI products seeing over 200% year-on-year growth. To meet surging AI demand, the company significantly increased its 2025 capital expenditure forecast to $91-93 billion, with further substantial investments in AI infrastructure projected for 2026, signaling aggressive long-term commitment despite near-term cost pressures from increased depreciation and a $3.5 billion EU fine.
Alphabet reported a landmark Q3 2025, achieving its first-ever $100 billion quarterly revenue at $102.3 billion, marking a 16% year-over-year increase. This robust performance was driven by double-digit growth across all core businesses, including Search, YouTube, and Cloud, with CEO Sundar Pichai explicitly stating that "AI is now delivering tangible business results across the entire company." Google Cloud demonstrated exceptional strength, with revenue growing 34% year-over-year to $15.2 billion, surpassing market expectations. AI-related revenue within Cloud reached "billions of dollars per quarter," and products built on generative AI models experienced over 200% year-over-year revenue growth, contributing to a 46% quarter-over-quarter surge in backlog to $155 billion. Similarly, AI Overviews and AI Modes accelerated search query growth, while AI Max became the fastest-growing ad product, unlocking billions of new queries. To support this AI-driven expansion, Alphabet significantly raised its 2025 capital expenditure forecast to $91-93 billion, exceeding market expectations, and projected a "significant increase" for 2026, primarily for AI infrastructure. While these investments are yielding productivity gains internally and driving external demand, they also led to a 41% year-over-year increase in depreciation expenses to $5.6 billion and contributed to a $3.5 billion EU antitrust fine, impacting the reported operating margin.
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