Alphabet Third Quarter 2025 Earnings Conference Call

Summary

Alphabet reported exceptional Q3 2025 results, achieving its first $100 billion revenue quarter with 16% year-over-year growth driven by AI innovations across all business segments. The company demonstrated strong momentum in AI adoption, with the Gemini app reaching 650 million monthly active users and AI-powered search experiences like AI Overviews and AI Mode driving significant query growth, particularly among younger demographics. Google Cloud continued its impressive trajectory with 34% revenue growth to $15.2 billion, powered by enterprise AI products and a growing backlog that reached $155 billion. The company's full-stack AI approach, spanning custom infrastructure (TPUs and GPUs), leading models like Gemini, and consumer-facing products, positioned it uniquely in the market with over 70% of Cloud customers now using AI products. YouTube maintained its streaming leadership while successfully launching new formats like exclusive NFL broadcasting, and the company crossed 300 million paid subscriptions across its services. Looking ahead, Alphabet increased its 2025 CapEx guidance to $91-93 billion and expects significant further increases in 2026 to meet surging AI infrastructure demand, reflecting confidence in the transformative potential of AI across search, cloud, and emerging applications like autonomous driving through Waymo.

Key Points

• Alphabet delivered first-ever $100 billion quarter with 16% year-over-year revenue growth
• AI driving significant business results across all major segments with double-digit growth
• Gemini app reached over 650 million monthly active users with 3x query growth from Q2
• Google Cloud achieved 34% revenue growth to $15.2 billion, driven by enterprise AI products
• AI Overviews and AI Mode driving meaningful query growth, especially among younger users
• Cloud backlog grew 46% quarter-over-quarter to $155 billion
• YouTube maintained #1 streaming position and successfully broadcast first exclusive NFL game
• AI infrastructure investments scaling with TPU and GPU capacity expansion
• Over 300 million paid subscriptions across Google One and YouTube Premium
• Strong momentum in enterprise AI with 70% of Cloud customers using AI products

Action Items

• Continue investing aggressively in AI infrastructure to meet growing customer demand
• Scale TPU capacity to meet tremendous demand from customers and partners
• Expand Waymo service to London, Tokyo, Dallas, Nashville, Denver and Seattle
• Release Gemini 3 later this year
• Increase CapEx investment range to $91-93 billion for 2025
• Continue testing and expanding ads in AI Mode before broader rollout
• Optimize technical infrastructure build-out for efficiency
• Expand AI Max search ads product globally after successful rollout

Decisions

• Updated CapEx outlook to $91-93 billion for 2025, up from previous $85 billion estimate
• Expect significant CapEx increase in 2026 with details to be provided in Q4 call
• Continue full-stack AI approach spanning infrastructure, research, and products
• Maintain twin-engine monetization strategy for YouTube (ads and subscriptions)
• Focus on enterprise AI as key growth driver for Cloud business
• Proceed with global expansion of AI-powered search experiences

Participants