Google parent Alphabet’s Q4 ad revenue rises 13.5% to $82.3 billion

New Delhi: Alphabet Inc., Google’s parent, said its advertising business delivered another strong quarter in Q4 2025, with digital ad revenue rising 13.5% year-on-year to $82.3 billion. 

Alphabet’s total revenue for the quarter rose 18% year-on-year to $113.8 billion, while net profit climbed 30% to $34.5 billion. 

For the full year, the company’s revenues crossed the $400 billion mark for the first time, reaching about $403 billion, up 15% year-on-year.

Google’s core search and advertising business grew 17% year-on-year to $63.1 billion in Q4. 

YouTube advertising revenue rose 9% to $11.4 billion, aided by direct-response advertising, while Google Network revenues dipped slightly, partly due to the absence of US election-related spending seen a year earlier.

The strong ad performance lifted Google Services revenue to $95.9 billion in the quarter, up 14% year-on-year. 

For the full year, YouTube revenues across advertising and subscriptions surpassed $60 billion, highlighting the platform’s growing role within Alphabet’s monetisation mix.

Beyond advertising, Google Cloud again emerged as the company’s fastest-growing business. Cloud revenue jumped 48% year-on-year to $17.7 billion in Q4, driven by demand for AI infrastructure and enterprise solutions. 

CEO Sundar Pichai said Cloud is now operating at an annual revenue run rate of over $70 billion, while backlog expanded to $240 billion. The segment also posted operating income of $5.3 billion, more than doubling from the previous year.

Alphabet also highlighted continued traction in subscriptions. Pichai said the company now has more than 325 million paid subscriptions globally across consumer services, led by Google One and YouTube Premium.

On YouTube, Pichai said subscription revenue continues to grow strongly, particularly YouTube Music Premium. He added that Google will soon launch new YouTube TV plans offering more choice and flexibility through over 10 genre-specific packages. 

Consumption trends on the platform are also shifting. In October 2025, viewers watched over 700 million hours of podcasts on living-room devices, up 75% year-on-year. 

AI is increasingly shaping the YouTube experience as well. Pichai said that on average, every day in December, more than one million channels used new AI creation tools to enhance content creation, while over 20 million viewers used a Gemini-powered “Ask” tool to learn more about the content they were watching.

A central theme of the quarter was Alphabet’s accelerating AI push around the Gemini family of models. 

In the earnings call, Pichai described the launch of Gemini 3 as a “major milestone,” adding that the Gemini app now has over 750 million monthly active users. He said Alphabet has sold more than eight million paid seats of Gemini Enterprise since the product was launched four months ago.

Pichai also highlighted efficiency gains, saying Alphabet reduced Gemini serving unit costs by 78 per cent over 2025 through model optimisation, improved utilisation and operational efficiencies, even as AI capabilities are scaled across Search, Gmail and YouTube. 

He described the current phase as an “expansionary moment,” noting that AI features are driving higher engagement without cannibalising core Search traffic.

Advertising leaders at Google emphasised the role of AI in strengthening the ad ecosystem. Philipp Schindler, Business Lead for Google Services at Alphabet, said the company is “investing in AI to drive significant improvements across all areas of marketing.” 

He said Gemini is helping advertisers in three critical areas: ad quality, advertiser tools and new AI-driven user experiences.

Schindler said Gemini models are being deployed to improve query understanding at a rapid pace, with near-monthly updates over the past two years. These improvements, he said, have enhanced query matching, ranking and relevance, leading to a meaningful reduction in irrelevant ads. Gemini’s improved understanding of intent is also enabling monetisation of longer and more complex queries, including in non-English languages, expanding opportunities for advertisers globally.

On the tools side, Schindler said advertisers are increasingly using Gemini as a real-time creative and optimisation partner. 

In Q4 alone, advertisers used Gemini-powered features to generate nearly 70 million creative assets through text customisation across AI Max and Performance Max. 

Looking ahead, Alphabet signalled a sharp ramp-up in investment to support AI and cloud growth. The company guided for capital expenditure of $175 billion to $185 billion in 2026, largely directed towards data centres, compute infrastructure and custom silicon to meet rising AI demand. 

Chief Financial Officer Anat Ashkenazi cautioned that higher depreciation and energy costs linked to these investments could weigh on near-term margins, even as the company reiterated confidence in the long-term AI opportunity.