Alphabet, the parent company of Google, has reported a sharp rise in revenue for the September quarter, powered by a standout performance from Google Cloud and continued growth in Search. The results underline how demand for artificial intelligence infrastructure has become a central driver of the company’s business.
Revenue rose 25 per cent year on year to USD 127.6 billion, according to the company’s earnings release. Alphabet said its annual revenue run rate had reached half a trillion dollars, a milestone that reflects the scale its advertising, cloud and subscription businesses have now reached together.
Key Takeaways
- Alphabet revenue rose 25 per cent to USD 127.6 billion in the September quarter.
- Google Cloud revenue more than doubled to USD 30.7 billion, up 103 per cent year on year.
- Net income fell despite higher revenue, after an USD 8.7 billion loss on equity securities.
Cloud leads the quarter
Google Cloud was the clear standout of the quarter. Revenue more than doubled to USD 30.7 billion, up 103 per cent from a year earlier. Alphabet attributed the growth to demand for artificial intelligence infrastructure and solutions, core cloud services and sales of its tensor processing unit (TPU) systems.
Cloud operating income also rose sharply, increasing to USD 11.1 billion from USD 3.6 billion in the year-ago quarter. The jump shows that the cloud division is not only growing quickly but also becoming a much larger contributor to Alphabet’s overall profit.
The cloud result fits a wider pattern across the technology industry, where companies building AI systems need ever more computing capacity. That demand has also lifted chipmakers: Samsung recently reported a record quarterly profit on the AI chip boom, while investment in AI partnerships continues to reshape the sector, as seen in Nvidia’s major AI partnership investment.
We had a strong quarter and are now on a half-trillion dollar revenue run rate.
Search and services keep growing
Google Services revenue rose 11 per cent to USD 96.3 billion. Within that, Google Search and other revenue increased 12 per cent to USD 63.4 billion, showing that the core search business continues to expand even as AI tools change how people look for information.
Chief Executive Officer Sundar Pichai said AI investments were driving overall Search query growth, including commercial queries, with the year-on-year growth rate reaching its highest level in five years. He added that the company’s full-stack approach was driving momentum across its businesses.
The company recorded its 13th consecutive quarter of double-digit revenue growth. Operating income rose 30 per cent to USD 40.6 billion, while operating margin stood at 31.8 per cent.
- Revenue: USD 127.6 billion, up 25 per cent year on year
- Operating income: USD 40.6 billion, up 30 per cent
- Google Cloud revenue: USD 30.7 billion, up 103 per cent
- Google Services revenue: USD 96.3 billion, up 11 per cent
- Google Search revenue: USD 63.4 billion, up 12 per cent
AI usage reaches new scale
Pichai also pointed to the scale of AI usage across Google’s products. He said the Gemini app had reached one billion users, making it the fastest-growing product in Google’s history.
Overall, the company’s first-party model APIs are now processing nearly 32 billion tokens per minute, more than four times what was processed a year ago, he said. That figure gives a sense of how quickly AI workloads have grown inside Google’s own systems.
Elsewhere, YouTube Music and Premium subscribers crossed 150 million globally, including trials. The subscription milestone adds to a services business that now spans advertising, cloud, hardware and paid subscriptions.
The growth is not limited to large enterprises. Smaller businesses are also turning to AI tools in the cloud, a trend reflected in Google Cloud’s push into AI for small and medium businesses.
Why profit fell despite higher revenue
Despite the strong revenue growth, net income available to common stockholders declined to USD 26.2 billion from USD 35 billion a year earlier. Diluted earnings per share fell to USD 2.12 from USD 2.87.
The results were affected by an USD 8.7 billion loss on equity securities, which reduced net income by USD 6.7 billion, according to the company. That item explains why the bottom line moved in the opposite direction to revenue and operating income in this quarter.
Alphabet’s Other Bets segment, which houses its longer-term experimental businesses, recorded revenue of USD 372 million, while its operating loss widened to USD 2 billion from USD 1.4 billion a year earlier.
What to Watch Next
What to watch next is whether Google Cloud can sustain its current pace of growth, whether AI infrastructure demand continues to support chip and cloud sales, and whether Search query growth holds at its current rate. The next quarters will also show how the equity-securities item affects reported profit, and whether the half-trillion-dollar revenue run rate becomes a lasting level rather than a single-quarter milestone.