Alphabet (GOOGL.US) has released its Q2 2025 results. The company surpassed expectations in all key aspects of its financial report, reporting higher revenues, profits, and strong momentum in key segments. Despite the strong results, we are seeing declines in the stock in after-hours trading. The market's reaction may be related to the upward revision of projected capital expenditures for the full fiscal year.
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Create account Try a demo Download mobile app Download mobile appAlphabet shares are slightly down in after-hours trading following the earnings release. Source: xStation
In terms of revenue, the company reported $96.43 billion, a 14% increase year-over-year (YoY) and 3% higher than consensus forecasts. This result is primarily driven by the robust performance of the Google Services segment, which once again exceeded expectations and grew by 12% YoY. Google Search, despite increasing competition from AI models, continues to generate the main portion of the advertising segment's revenue, growing to $54.19 billion (+12% YoY). The YouTube advertising segment also achieved a strong result, growing to $9.8 billion, a 13% YoY increase, and beating market expectations by 2%.
The cloud segment also did not disappoint, generating $13.62 billion in revenue, representing a 32% YoY increase. Contrary to expectations, the segment's growth rate not only did not decline quarter-over-quarter (QoQ) but rebounded to its highest level since Q3 2024. This occurred despite a growing base effect and simultaneously translated into the segment's highest revenue in the company's history.
Selected 2Q25 financial results vs. consensus. Source: XTB Research, Bloomberg Finance L.P.
The company also delivered on profitability. Operating profit of $31.27 billion translated into an operating margin of 32.4%, a flat reading YoY and 2 percentage points higher than consensus forecasts.
Selected 2Q25 financial results vs. consensus. Source: XTB Research, Bloomberg Finance L.P.
The only negative surprise in Alphabet's report remains the issue of capital expenditures (Capex). The projected Capex for the full fiscal year is $85 billion (an increase from $75 billion in the previous report). Not only did the market not expect such a significant increase, but it primarily priced in a reduction of projected expenditures to $73 billion. This, combined with higher expenditures in Q2, which amounted to $22.45 billion (+70% YoY), indicates that Alphabet will have to pay increasingly more to continue its fight for dominance in the latest technology market.
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