ii view: Gemini app owner Alphabet chased to new record
Can this owner of the iconic Google search engine push users towards its own AI enhanced app? We assess prospects.
30th October 2025 15:46
by Keith Bowman from interactive investor
Third-quarter results to 30 September
- Revenue up 16% to $102.3 billion
- Adjusted earnings up 35% to $2.87 per share
Chief Executive Sundar Pichai said:
“Alphabet had a terrific quarter, with double-digit growth across every major part of our business. We are investing to meet customer demand and capitalize on the growing opportunities across the company.”
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ii round-up:
Google and Gemini app owner Alphabet Inc Class A (NASDAQ:GOOGL) reported third-quarter sales and earnings that beat Wall Street forecasts, driven by demand for AI related services.
Sales of its Google Cloud division soared by a third to $15.2 billion as companies continued to seek data hosting services for their own AI software offerings. That helped send group-wide revenue up 16% from a year ago to $102.3 billion, their first time above $100 billion. Earnings climbed 35% to $2.87 per share, exceeding estimates of $2.33 per share.
Shares in the Magnificent Seven company rose 6% in US trading to near $292, a record high, having come into these latest results up around 45% so far in 2025. That's similar to the rise in fellow Mag7 stock NVIDIA Corp (NASDAQ:NVDA), the high-performance chip maker . Other Mag7 companies Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) are both up by less than 10%.
Users of Google’s upgraded search and AI enhanced Gemini app now total over 650 million active users globally, a rise from just 90 million in October 2024. The Gemini app largely competes against Chat GPT, owned by OpenAI, and Microsoft Corp (NASDAQ:MSFT)'s Copilot.
Revenues for the Google Services division, encompassing the app search business, rose 14% to $87.1 billion.
Alphabet increased expected capital expenditure for the current 2025 financial year to between $91 billion and $93 billion. That’s up from a forecast maximum of $85 billion earlier this year as management continues to invest in new facilities such as datacentres.
Expenditure for 2026 is expected by Alphabet to go even higher, with management planning to outline details at fourth-quarter results in late January.
ii view:
Started in 1998 as Google and changing to Alphabet in 2015, the company generated revenues of just over $350 billion in 2024. Google Services, combining businesses such as advertising and YouTube subscription fees, generated the bulk of sales at 87%. That was followed by the Cloud data business at 12%, with Other Bets, and including its Robo taxi service Waymo, making up most of the 1% balance.
Geographically, North America remained its biggest market during 2024 at almost half of all sales. That’s followed by Europe, the Middle East and Africa (EMEA) at around 29%, Asia-Pacific 16%, and Latin America the balance.
For investors, Google dominance in the search engine space is now arguably being tested by increased competition from AI enhanced providers such as ChatGPT and Copilot. Expected investment spending of up to $93 billion this year on items such as datacentres and AI is not guaranteed to generate bigger profits. Supply chain constraints in relation to building new datacentres were previously highlighted, while government concerns and lawsuits regarding industry dominance have not gone away.
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To the upside, dominance within the non-AI search space likely leaves Alphabet well placed to pick up the running in the new AI enhanced world. Diversity of both business type and geographical region exist. Ownership of the mobile phone Android operating system leaves it less depend than say Meta on the metrics set by Apple for advertising privacy. An increased focus on shareholder returns previously saw the introduction of a dividend payment alongside share buybacks, leaving the shares on a forecast dividend yield of around 0.3%.
On balance, and while risks remain, this well managed and diversified tech titan looks to continue justifying its place in many already diversified investor portfolios.
Positives
- Alphabet dominates the digital advertising market
- Increasing investment
Negatives
- Government concerns for competition
- Subject to currency movements
The average rating of stock market analysts:
Buy
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