Alphabet Inc., Google’s parent company, reported strong financial results for the second quarter of 2025, surpassing Wall Street expectations. The company posted $96.4 billion in revenue, up 14% year-over-year. Earnings per share also rose 22% to $2.31, outperforming analyst estimates of $2.17–$2.20.
Google Cloud, Search, and YouTube Drive Alphabet’s Growth
Net income for the quarter climbed 19% to $28.2 billion, while the operating margin remained solid at 32.4%. Its core business units all saw double-digit growth:
- Google Cloud revenue jumped 32%, hitting $13.6 billion. This growth was powered by demand for core cloud products, AI infrastructure, and generative AI services.
- Google Services, which include YouTube ads, Google Search, and subscriptions, earned $82.5 billion, a 12% increase from last year.
- YouTube ads alone generated $9.8 billion in revenue.
- The company’s “Other Bets” segment, including Waymo and Verily, brought in $373 million, slightly up from $365 million last year. However, it reported a $1.25 billion operating loss, wider than last year’s $1.13 billion loss.
AI Takes Center Stage: Gemini and AI Overviews See Rapid Adoption
Alphabet’s AI tools are rapidly gaining traction:
- AI Overviews, Google’s AI-powered search summaries, now reach over 2 billion monthly users in 200+ countries, up from 1.5 billion just a quarter ago.
- The Gemini AI chatbot has surpassed 450 million monthly active users.
Interestingly, the company also announced an increase in its 2025 capital expenditure forecast to $85 billion, a $10 billion jump from its February projection. This uptick is driven by rising demand for cloud infrastructure and AI services.
CEO Sundar Pichai confirmed this, saying:
“We had a standout quarter, with robust growth across the company. We are leading at the frontier of AI and shipping at an incredible pace. AI is positively impacting every part of the business, driving strong momentum. Search delivered double-digit revenue growth, and our new features, like AI Overviews and AI Mode, are performing well. We continue to see strong performance in YouTube as well as subscriptions offerings. And Cloud had strong growth in revenues, backlog and profitability. Its annual revenue run-rate is now more than $50 billion. With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures in 2025 to approximately $85 billion and are excited by the opportunity ahead.”
GOOGL Stock Dips Despite Record Quarter
Still, Alphabet’s stock had a mild reaction. Some investors were worried about rising spending and growing competition from AI-powered search engines. This raised doubts about future returns and how efficiently the company is running.
Moving on, while these AI advancements are enhancing user engagement and search capabilities, they’re also driving up energy consumption. It’s becoming a growing concern for Alphabet’s sustainability efforts.
Let’s see how Google is balancing these two hand in hand.
Alphabet’s Record-Breaking Clean Energy Procurement
Alphabet remains committed to its climate moonshots, aiming to run its operations on carbon-free energy 24/7. In 2024, it procured over 8 GW of clean energy, the highest in company history and double the amount in 2023.
- Since 2010, the company has signed more than 170 clean energy deals totaling over 22 GW, nearly equivalent to Portugal’s total renewable energy capacity.
These deals span across North America, Europe, Latin America, and the Asia-Pacific.
In Europe, Alphabet expanded its offshore wind projects in the Netherlands and added new PPAs in Italy, Belgium, and Poland. In Asia, it supported clean energy in India, Japan, Singapore, and Taiwan, customizing agreements to local market needs.
Energy Efficiency Across Data Centers: Small Improvements, Big Impact
Google or Alphabet is also focused on maximizing energy efficiency across its infrastructure. As per the company’s latest sustainability report, its global data center fleet reached a record low power usage effectiveness (PUE) of 1.09 in 2024. While the improvement from 1.10 may seem minor, it significantly reduces electricity consumption at Alphabet’s scale.
Their custom-designed high-performance servers and smart building technologies further optimize energy use. As a result, Google’s data centers now deliver over six times more computing power per unit of electricity than they did five years ago.
Tackling AI’s Energy Demand with Smarter Computing
With the rapid rise in AI workloads, Alphabet is adapting its infrastructure through “carbon-intelligent computing.” This system shifts computing tasks based on when and where the grid has cleaner energy, helping ease stress on local power networks and cut emissions.
The platform balances compute needs with local energy availability, ensuring users experience uninterrupted service whether they’re watching YouTube, using Google Maps, or interacting with Gemini.
SMRs and Geothermal: Bold Steps Toward 24/7 Clean Power
Alphabet is also leading the charge in advanced energy technologies. In 2024, it became the first company to sign corporate deals for nuclear power from Small Modular Reactors (SMRs). Partnering with Kairos Power, the company aims to add up to 500 MW of clean nuclear energy to U.S. grids by 2035. The first reactor is expected by 2030.
The tech giant also made progress with advanced geothermal projects, helping diversify its clean energy mix and offering reliable, around-the-clock power for its energy-hungry AI systems.
- Google Inks World’s Largest Hydropower Deal with Brookfield at $3B to Power AI Growth
- Google Bets Big on Next-Gen Nuclear and Carbon Credits from Superpollutants For a Greener AI
Emissions: Progress, But Scope 3 Still Rising
Alphabet’s total ambition-based emissions reached 11.5 million metric tons CO₂e in 2024. While emissions from operations dropped due to cleaner energy use, Scope 3 emissions rose by 22%. It was driven largely by data center expansion and increased hardware production for AI.
Despite this, the company increased its carbon-free energy (CFE) usage across offices and data centers to 66%, and achieved at least 80% hourly CFE in 9 out of 20 global grid regions.
Expanding Carbon Removals
At the same time, Google is working to cancel out any remaining emissions by 2030 using a growing portfolio of carbon credits that deliver real climate benefits. The company is accelerating various carbon removal projects and forming strategic partnerships to reach its net-zero goal.
In 2024, Google expanded its carbon removal portfolio in a big way. It signed 16 new offtake agreements worth over $100 million, covering about 728,300 tonnes of CO₂ removal credits. This brought its total carbon removal portfolio to around 782,400 tonnes—a 14-fold jump compared to 2023.
Real-World Climate Impact at Scale
Alphabet’s sustainability efforts go beyond internal operations. In 2024, five of its products: Nest thermostats, Google Earth Pro, Solar API, fuel-efficient routing in Maps, and Green Light collectively helped reduce 26 million metric tons of GHG emissions. That’s more than twice Alphabet’s total annual emissions and equivalent to the yearly energy use of 3.5 million U.S. homes.
Alphabet Faces Key Challenges on the Road to Net-Zero
The company acknowledges that reaching net-zero emissions by 2030 is getting tougher. One big challenge is the slow progress in clean energy technology. For example, geothermal and small modular nuclear reactors (SMRs) remain costly and require additional government support to expand.
The problem is even more significant in emerging markets, such as the Asia-Pacific. Many of these areas still lack sufficient carbon-free electricity options to support Alphabet’s clean energy goals.
Thus, the road ahead is uncertain. AI’s rising energy demand, regulatory volatility, and slower-than-expected clean tech deployment pose serious challenges. For Alphabet, balancing innovation with climate responsibility remains a key test in the years leading to 2030.
