GOOG News
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An incredible result from GOOG, $28B net income for a 13 week quarter. The stock has done well lately but there is still an overhang from sentiment that the company has anti trust issues and is spending too much on AI. I think these fears are materially overblown.
GOOG reported its second-quarter 2025 earnings on 23 July 2025, showing robust financial performance driven by strong growth in Search, YouTube, and Cloud segments, underpinned by advancements in artificial intelligence (AI). Despite a significant increase in CapEx, the company exceeded analyst expectations, though investor sentiment was mixed due to concerns over rising expenditure (always!)and regulatory challenges.Key Financials (Q2 2025)Revenue: $96.43 billion, up 13.8% year-over-year (YoY), surpassing estimates of $94 billion.
Revenue (ex-TAC-traffic acquisition cost): $81.2 billion, compared to expectations of $79.6 billion.
Earnings Per Share (EPS): $2.31 (adjusted), a 22% YoY increase, beating estimates of $2.18.
Net Income: $28.2 billion, up 19% YoY.
Operating Income: $31.3 billion, up 14% YoY, with an operating margin of 32.4% (flat YoY despite legal settlement costs).
Google Cloud Revenue: $13.62 billion, up 32% YoY, exceeding estimates of $13.11 billion.YouTube Advertising Revenue: $9.8 billion, up 13% YoY, slightly above estimates of $9.56 billion.
Search Revenue: $54.1 billion, up 11% YoY, surpassing expectations of $52.7 billion.
Traffic Acquisition Costs (TAC): $14.71 billion, in line with expectations.
Conference call highlights
AI-Driven Growth:Pichai emphasised that “AI is positively impacting every part of the business, driving strong momentum.” Search saw double-digit revenue growth, fuelled by AI features like AI Overviews (1.5 billion monthly users) and AI Mode (100 million monthly active users).Google’s Gemini AI model has grown to 450 million monthly users, reinforcing Alphabet’s competitive edge in AI against rivals like ChatGPT.
Google Cloud’s 32% YoY revenue growth was driven by demand for AI infrastructure and generative AI solutions, with an annual revenue run-rate exceeding $50 billion.
Capital Expenditure :Alphabet announced a $10 billion increase in its 2025 CapEx guidance, raising the total to $85 billion from $75 billion, reflecting strong demand for cloud and AI infrastructure.
CFO Anat Ashkenazi noted that Q2 CapEx was $22.4 billion, significantly above estimates of $18.2 billion, primarily for servers and data centres(nice). The increase is driven by a “tight supply environment” for chips needed to train and run AI models.
Ashkenazi highlighted that CapEx is expected to rise further in 2026 due to ongoing demand, but Alphabet is focused on efficient allocation to mitigate profitability concerns. A “highly rigorous process” ensures optimal use of resources.
The increased CapEx raised investor concerns about near-term profitability(we can see profit headwinds NOT), as depreciation costs are expected to accelerate in 2025 due to prior and ongoing infrastructure investments.
Positive Developments:Search: AI Overviews and AI Mode have boosted user engagement, enabling Alphabet to address more complex queries and maintain its dominance despite competition from AI-powered chatbots. Search revenue grew 11% YoY, outperforming expectations.
YouTube: The platform’s ad revenue grew 13% YoY, driven by increased viewership on Connected TV and Shorts monetisation, which now matches or exceeds traditional in-stream ads in key markets. YouTube’s shift to television as its primary consumption medium is eroding traditional network market share.
Google Cloud: The segment’s profitability improved, with an operating margin of 20.7% (up from 17.1% in Q1 2025), reflecting strong demand for AI and core cloud products.
Subscriptions and Other Bets: Subscription platforms (YouTube, Google One) grew 19% YoY to $10.4 billion, with 270 million paid subscribers globally. Waymo, Alphabet’s autonomous vehicle unit, is scaling, serving over 150,000 paid rides weekly.Talent and Innovation: Pichai downplayed concerns about AI talent wars, stating that retention and new talent acquisition metrics remain “healthy.” The company continues to innovate rapidly, with over 1,000 new cloud products and features launched in the past eight months.
After an initial soft after hours reaction, the stock rose a few dollars and futures are up nicely overall.
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GOOG shares are up circa 6% in PM to an ATH of $293 due to Berkshire Hathaway disclosing a 4-5B investment. Nice to see the stock make gains however it's not particularly rational is it. Berkshire buying the stock is not an exciting event which has much meaning. What do they know. They've ignored the stock for 20 years and now think it's cheap-maybe, but they hardly have a great tech driven record.
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I was reading about the Space X capital raise at a $800B valuation and they intend to take the company public some time next year at a 1-1.5T valuation based on starlink. Alphabet took a large stake in Space X 10 years ago acquiring somewhere between 7-7.5% equity for only $900M-a little known fact . Todays's valuation puts that at $56B and the IPO could push that to closer to 80-100B. We will see in February when they report just how much unrealised gain they book on the mark to market. Probably 25-30B gain!
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Musk now talking about putting data centres in space! That would be a game changer.
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Musk now talking about putting data centres in space! That would be a game changer.
@Coopersale said in GOOG News:
Musk now talking about putting data centres in space! That would be a game changer.
He is obsessed with space.
TBH, more DCs in Iceland would be good enough: low energy cost, simple cooling. Much easier to get the h/w built
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It's mostly science fiction due to the costs today but it's good to push the boundaries of what is possible-after all, it's how we get there, you have to start somewhere. The next big thing will likely be deployment of humanoid robots at scale within the next 24 months and in terms of usable AI 'autonomous execution' where you set a task and it completes it without additional prompts.
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Sorry meant to post this with my comment above.
https://x.com/elonmusk/status/2000603814249079165?s=61&t=iHaQYNHaXHYa5fzY9gX_Vw -
Sorry meant to post this with my comment above.
https://x.com/elonmusk/status/2000603814249079165?s=61&t=iHaQYNHaXHYa5fzY9gX_Vw@Coopersale said in GOOG News:
Sorry meant to post this with my comment above.
https://x.com/elonmusk/status/2000603814249079165?s=61&t=iHaQYNHaXHYa5fzY9gX_VwI can see the logic in that. It'll also end the moaning from the MMGW types as it won't release any gases on earth.
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You have to hand it to Musk-he's a master marketer- it won't be long and he'll set up a real estate agency selling plots for sale on Mars-
