Alphabet Inc., Google's parent company, has reported a strong first quarter for 2025, exceeding analyst expectations with revenue of $90.2 billion. This represents a 12% increase year-over-year, driven by robust performance in Google Search, YouTube ads, and Google Cloud. Google Cloud revenue increased by 28% to $12.3 billion, fuelled by growth in Google Cloud Platform, AI Infrastructure, and Generative AI Solutions. Google Search generated $50.7 billion in sales. The company's net income rose by 46%, resulting in earnings per share of $2.81. Alphabet's CEO, Sundar Pichai, highlighted the company's AI advancements, including the rollout of Gemini 2.5, as key drivers of this growth. The company has also announced a 5% increase to its dividend, bringing the quarterly cash dividend to $0.21.
Alphabet's Q1 success is attributed to its focus on AI-driven innovation and strong performance across its core business segments. Google is prioritising visual and immersive ad formats across YouTube and Search, shifting focus from traditional keyword-based targeting to more intent-driven placements. The company's AI-powered advertising tools are improving ad relevance and performance, with businesses using DemandGen seeing an average 26% year-over-year increase in conversions per dollar spent. The company's shares jumped 4.35% after hours following the earnings release. The company also announced board authorisation for a $70 billion stock buyback program.
However, the digital advertising landscape is rapidly evolving, and Google Ads is poised to reach a new milestone in 2025. Businesses should prepare for significant changes that will transform how they reach their audience and optimise their performance. As more and more businesses invest in search advertising, competition for high-intent keywords increases, leading to higher costs for keyword bids which drives up cost per lead.