Alphabet Reports 19% Profit Rise, Boosts AI, Cloud Spending to $85B

Alphabet reported strong financial results for the second quarter of 2025, with revenues reaching $96.4 billion and net profit rising 19% year-over-year to $28.2 billion, driven largely by growth in advertising, cloud services, and AI-related products. Google's advertising revenue increased by 10.4%, with YouTube's ad earnings benefiting from expanding TV viewership, which has surpassed mobile in some regions. AI is significantly impacting Alphabet's business, with products like AI Overviews serving over 2 billion monthly users and AI Mode gaining traction in the US and India, contributing to increased search activity and new revenue models including AI-enabled ads. The cloud division saw a 32% revenue increase to $13.62 billion, prompting the company to raise its 2025 capital expenditure forecast to $85 billion, a $10 billion increase, primarily to meet growing demand for AI infrastructure and cloud services. CEO Sundar Pichai emphasized that these investments are crucial to maintaining competitive positioning against rivals like OpenAI and Microsoft, underscoring the importance of AI in driving the company's future growth and innovation. Despite the substantial spending, Alphabet is confident in the long-term return on investment as it expands its AI capabilities and cloud infrastructure to sustain momentum across its business segments.