Strong demand for artificial intelligence helped boost Alphabet’s financial results, with both Google parent’s core advertising and cloud computing businesses exceeding revenue expectations.
Despite concerns about an AI bubble, the search giant raised its capital spending forecast for the year to between $91 billion and $93 billion.
Alphabet, which spent $52.5 billion in 2024, had already surprised Wall Street twice this year with its ambitious spending projections: first announcing a $75 billion outlay in February and then raising it to $85 billion in July.
The company’s shares rose 6% in after-market trading.
The company reported total revenue of $102.35 billion for the quarter, compared to analysts’ average estimate of $99.89 billion, according to data compiled by LSEG.
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Google Cloud, with a 34% increase in revenue, was one of Alphabet’s fastest-growing businesses, benefiting from growing enterprise demand for AI-powered infrastructure and data analytics services.
The unit generated revenue of $15.16 billion, beating estimates of $14.72 billion. This performance was likely driven by strong enterprise demand for its AI infrastructure.
The unit continues to close the gap on its largest competitors, Microsoft’s Azure and Amazon Web Services, thanks to strong demand for Vertex AI and its custom AI chips, known as tensor processing units.
Competition in the broader AI and cloud market is intensifying, with rivals aggressively cutting prices and introducing new generative AI capabilities.
On the other hand, revenue from Google’s advertising business increased 12.6%, reaching $74.18 billion, far exceeding estimates of $71.79 billion, allaying the fears of some investors.
With information from Reuters.
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