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Google parent Alphabet's FY25 continued strongly with an above expectations Q2 performance. Revenues were up 13% yoy at constant currency to $96.4bn. Operating income rose 14%, with margins dipping by 160 bps qoq to 32.4% as the result of a charge related to a settlement in principle of certain legal matters. The company also reported that capital expenditures will climb to $85bn, up from the previously projected $75bn. Alphabet's shares rose by more than 1% in after-market trading.
The tech giant saw double-digit growth across all major divisions: Google Search, YouTube ads, subscriptions, and Google Cloud. Google Services generated $82.5bn, while Cloud revenues surged 32% to $13.6bn, fuelled by robust demand for AI infrastructure and generative AI solutions. Indeed, CEO Sundar Pichai believes that "AI is positively impacting every part of the business, driving strong momentum".
As we have noted before (see here), policy and regulatory pressures could cloud Alphabet's outlook. The company faces two major antitrust cases in the U.S., one already ruling it a monopoly in ad tech, and another challenging its dominance in search. A potential forced breakup could reshape the company's future.
On this side of the pond, the company continues to deepen its roots in the UK and across Europe. Kate Alessi took up the reins as Google's new UK managing director in June to oversee a 7,000-strong workforce (See - Google appoints Alessi as new UK MD). Google Cloud is also continuing to gain traction with large enterprises in the UK, which helped the business to climb two places in TMV's latest UK SITS Supplier Rankings (see here) on the back of revenue growth of more than a quarter in 2024.
Posted by: Duncan Aitchison at 10:10
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