You’ve probably heard the headlines. Google’s parent company, Alphabet, just hit a milestone that feels like something out of a sci-fi novel. For the first time ever, they crossed the $100 billion revenue mark in a single quarter.
Honestly, the Alphabet earnings Oct 2025 report wasn't just about big numbers. It was a vibe shift. For years, critics said Google was "behind" in the AI race, lagging while OpenAI and Microsoft stole the spotlight. But looking at the Q3 results released in late October, that narrative is basically dead.
The company pulled in $102.3 billion in revenue, a 16% jump from the previous year. If you look back just five years, they were at $50 billion. They doubled their entire business in half a decade while being one of the largest entities on Earth. That is genuinely wild.
The Cloud is No Longer a Side Hustle
Everyone focuses on Search, but the real story of the Alphabet earnings Oct 2025 cycle is Google Cloud. It didn't just grow; it accelerated. Revenue hit $15.2 billion, up 34% year-over-year.
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More importantly? It’s actually making serious money now. The operating margin for Cloud climbed to 23.7%, up from around 17% a year ago.
Google Cloud is finally hitting its "scale" moment. Sundar Pichai mentioned on the call that they’ve signed more billion-dollar deals in the first three quarters of 2025 than in the previous two years combined. Big names like Best Buy and Banco BV are leaning heavily on Google’s AI infrastructure. They also dropped a bombshell about their "backlog"—basically, work they've signed for but haven't billed yet—which now sits at a staggering $155 billion.
Search Isn't Dying; It's Changing Shape
There was a lot of fear that AI chatbots would kill Google Search. The October report suggests the opposite is happening.
Google’s "Search & other" revenue grew 15% to $56.6 billion. They’ve been rolling out things like "AI Mode" and "AI Overviews" globally, and it turns out people are actually using them to search more.
- AI Mode now has 75 million daily active users.
- The Gemini app has over 650 million monthly active users.
- Younger users are engaging with AI-enhanced search at higher rates than traditional search.
The big takeaway? AI isn't replacing the search engine; it's making the "box" more useful for complex questions. Instead of just typing "best running shoes," people are asking "what are the best running shoes for someone with high arches who runs on gravel?" and Google is actually able to answer it.
The $93 Billion Receipt
If there’s one number that should make investors blink, it’s the Capital Expenditures (CapEx). Alphabet is spending money like it's going out of style.
They raised their 2025 CapEx guidance to between $91 billion and $93 billion. Most of that is going toward data centers and custom chips like their seventh-generation TPU, Ironwood.
It’s a massive gamble. They are betting that the demand for AI compute is essentially infinite. While the profit margins are currently healthy—net income hit $35 billion this quarter—that level of spending means they have to keep winning. There is no "Plan B" if the AI boom cools off.
YouTube and the Subscription "Twin Engine"
YouTube is often the unsung hero of these earnings calls. Ad revenue there hit $10.3 billion, up 15%. But the real shocker? YouTube Shorts is now earning more revenue per watch hour in the U.S. than traditional long-form videos.
That’s a huge deal. It means they’ve finally figured out how to monetize the TikTok-style format effectively.
Then you have the subscription side. Alphabet now has over 300 million paid subscribers across Google One and YouTube Premium. This creates a "twin engine" of growth: they get the volatile ad money when the economy is good, and the steady subscription checks every single month regardless of what the market does.
What Really Happened with the Fine?
You might notice a slight dip in the "official" operating margin if you look at the raw SEC filings. That’s because of a $3.5 billion charge related to a European Commission fine.
Without that fine, their operating margin would have been a massive 33.9%. Even with it, they are sitting at 30.5%. They are becoming more efficient even as they hire more people—the headcount is back up to over 190,000 employees.
Actionable Insights for the Road Ahead
If you're watching Alphabet, don't just look at the stock price. Look at the infrastructure.
- Watch the TPU adoption: If companies like Anthropic continue to use Google’s custom chips instead of just buying NVIDIA GPUs, Google’s margins will stay high because they own the whole stack.
- Monitor Search "AI Mode" growth: This is the barometer for whether Google is winning the war against ChatGPT. If DAUs continue to climb, the "Search is dead" thesis is officially over.
- Keep an eye on 2026 CapEx: Management has already hinted that 2026 spending will be even higher than 2025. This means the pressure to deliver "AI ROI" is going to be the dominant story for the next 18 months.
The Alphabet earnings Oct 2025 report shows a company that has moved past the "panic" phase of the AI revolution and into the "execution" phase. They aren't just talking about AI anymore; they are billing for it.