AI search wars? Google still dominates as Alphabet’s revenue jumps 46% to $90 billion

Despite mounting fears that AI-powered search engines could erode Google’s dominance, Alphabet crushed expectations in Q1 and delivered a resounding message: the empire is still standing strong.

In its latest quarter, Alphabet stunned Wall Street with a 46% profit spike and a staggering $90 billion in revenue. AI search wars may be heating up, but Google continues to dominate, beating expectations across its core search and advertising businesses. Far from being dethroned by new AI challengers, Google’s revenue engines — including YouTube and Cloud — helped drive one of the company’s most impressive quarters yet.

Alphabet’s blowout performance showed that all the talk of Google’s downfall was premature. Even as AI competitors flood the search space, Alphabet’s grip remains firm, delivering major gains and signing off on another $70 billion stock buyback. Finance, healthcare, travel, and retail advertisers fueled the strong quarter, while Google’s AI Overviews tool in search now reaches over 1.5 billion users monthly. In the race for the future of search, Alphabet made it clear: innovation may surge, but dominance doesn’t crumble easily.

AI Threat? Not Even Close. Alphabet’s $90B Blowout Shows Google Dominates AI Search Competition

According to CNBC, Alphabet, the parent company of Google and YouTube, reported stronger-than-expected first-quarter growth on Thursday after the bell. Shares climbed more than 5% in after-hours trading, CNBC reported.

Here’s how Alphabet performed compared to analyst expectations from LSEG:

• Revenue: $90.23 billion vs. $89.12 billion expected

• Earnings per share: $2.81 vs. $2.01 expected

Other key numbers from the report included:

• YouTube advertising revenue: $8.93 billion vs. $8.97 billion expected

• Google Cloud revenue: $12.26 billion vs. $12.27 billion expected

• Traffic acquisition costs (TAC): $13.75 billion vs. $13.66 billion expected

According to its latest earnings report, Alphabet’s search and advertising businesses continue to grow steadily, even as AI competition intensifies. Overall revenue rose 12% from a year ago, beating the 10% growth Wall Street had projected.

Google’s AI Overviews Now Reaches 1.5 Billion Users Monthly

YouTube’s ad revenue came in just short of expectations at $8.93 billion, while overall advertising brought in $66.89 billion, marking an 8.5% year-over-year increase. The “Search and other” segment posted $50.7 billion in revenue, up nearly 10% from the previous year. Alphabet said AI Overviews, its AI feature at the top of Google’s search results, now serves 1.5 billion users each month, up from one billion in October. Google introduced “AI Overviews,” also known as SGE (Search Generative Experience), in August 2024.

Philipp Schindler, Google’s business chief, said the company is “not immune to the macro environment,” and pointed out that President Donald Trump’s decision to end the de minimis trade loophole could “cause a slight headwind to our Ads business in 2025, primarily from APAC-based retailers.”

The de minimis exemption allows shipments under $800 to enter the U.S. without duties — a major factor for e-commerce players like Temu and Shein that have heavily advertised online. That loophole is set to close on May 2.

“I would say we have a lot of experience in managing through uncertain times, and we focus on helping our customers by providing deep insights into changing consumer behavior that is relevant to their business,” Schindler added.

Finance, retail, healthcare, and travel stood out as strong sectors fueling Google’s ad growth this quarter, he said.

Alphabet’s net income jumped 46% to $34.54 billion, or $2.81 per share, compared to $23.66 billion, or $1.89 per share, a year earlier. That total included $8 billion in unrealized gains tied to Alphabet’s investment in a private company. Stripping that out, Alphabet’s adjusted earnings came in at $2.27 per share, topping analyst expectations, according to LSEG.

Google Cloud reported $12.26 billion in revenue, just a touch below forecasts of $12.27 billion. But the unit grew 28% year over year and improved margins significantly, hitting 17.8% compared to 9.4% a year ago.

In a major move this quarter, Alphabet agreed to acquire cybersecurity startup Wiz for $32 billion in cash, nearly $10 billion more than it had offered in 2024. The company expects the deal to close next year pending regulatory approvals. CEO Sundar Pichai said the acquisition would help strengthen Google Cloud’s security offerings, explaining, “We think this will help spur more multicloud computing, something our customers want.”

Outside of its core businesses, Alphabet’s “Other Bets” segment, which includes Waymo and Verily, generated $450 million in revenue, down 9% from a year earlier. The unit posted a $1.23 billion loss, widening from $1.02 billion the previous year.

Waymo’s autonomous driving unit is showing signs of scaling. The company now provides over 250,000 fully autonomous paid rides per week across San Francisco, Los Angeles, Phoenix, and Austin — up from 200,000 in February before new expansions.

“Waymo is continuing to progress in building on its impressive technological achievements to scale rapidly and develop a sustainable business model,” Alphabet Chief Financial Officer Anat Ashkenazi said during the earnings call.

Ashkenazi also said Alphabet still plans to invest around $75 billion in capital expenditures this year, although spending could shift slightly depending on delivery and construction timelines.

Alphabet’s board approved another $70 billion in stock buybacks, matching the amount authorized last year.