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Cloud
An increasingly significant contributor to Alphabet’s success is Google Cloud – the division’s revenue increased by 35% year-on-year to $15.15 billion. According to CEO Sundar Pichai, more than 70% of all Google Cloud clients now use Google’s AI solutions, ranging from analytics and machine learning models to advanced Gemini language models.
Alphabet Stock Price Performance Over the Past Five Years*
Financially, the division also closed a record number of billion-dollar contracts, including a six-year deal with Meta worth $10 billion. As a result, the order backlog reached $155 billion — once again, a historic high.
AI Investments
Alphabet intends to maintain this pace, which implies massive investments in the future. Capital expenditures (CapEx) for 2025 have been repeatedly increased – from the original $75 billion up to a range of $91 to $93 billion. CFO Anat Ashkenazi also announced that the volume will increase further in 2026.
Advertising Business
Despite AI and cloud attracting considerable attention, advertising remains the dominant pillar of Alphabet’s business. The Google Search division grew by 15% year-on-year, bringing in $56.56 billion. YouTube alone added another $10.26 billion. In total, the advertising segment reached $74.18 billion, confirming that Google’s traditional business model remains highly profitable — now supported by a foundation of new AI tools that personalize and efficiently optimize advertising.
Gemini
The most visible proof of the company’s shift toward AI is the Gemini platform, which has become the core of several Google services. The number of users increased by 44% year-on-year, reaching 650 million.
Regulatory Issues and Market Reaction
Despite exceptional growth, Alphabet also faces certain risks. In September, the European Union imposed a $3.45 billion fine on the company for violating antitrust rules in the advertising technology sector. Although the fine reduced net income, it still reached $34.97 billion — 33% higher than a year earlier. The market immediately responded to this combination of strong fundamentals — following the release of quarterly results, Alphabet’s stock price rose by 5%. The share price thus continues its upward trend, which has delivered a 45% gain to Alphabet investors since the beginning of the year.*
* Past performance is not indicative of future returns.
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