Google reports $66.8 Bn in ad revenue for Q1, AI Overviews now used by 1.5 Bn monthly

New Delhi: Alphabet Inc., Google’s parent company, reported a first quarter for 2025, with advertising revenue driving significant growth. 

The tech giant posted total revenue of $90.23 billion, a 12% increase year-over-year, surpassing Wall Street’s projections of $89.1 billion. Alphabet’s net income surged 46% to $34.54 billion, or $2.81 per share, beating estimates of $2.01 per share. 

The standout performer was Google’s advertising sector, which generated $66.8 billion, exceeding analyst estimates of $66.4 billion and marking an 8.5% rise from the previous year.

Search advertising, under the “Google Search & Other” segment, brought in $50.7 billion, up 9.8% from $46.16 billion in Q1 2024. 

YouTube’s ad revenue climbed 10.3% to $8.93 billion, just shy of the $8.97 billion forecast, bolstered by strategic investments in live sports, Shorts monetisation, and tightened ad-blocker policies.

“Advertising continues to be the backbone of our revenue model,” said Philipp Schindler, Google’s Chief Business Officer, during the earnings call. 

He highlighted the role of AI-powered tools, such as AI Overviews, which now serve 1.5 billion monthly users and have expanded commercial query volumes, enhancing ad relevance and performance. 

New AI-driven features like virtual try-ons and Performance Max campaigns are also helping advertisers achieve better results, reinforcing Google’s position as the leader in digital advertising.

Despite the robust ad performance, Alphabet faces challenges. The company is navigating two significant antitrust rulings, including a recent federal court decision declaring Google’s ad-tech business an illegal monopoly. This follows an earlier ruling against its search dominance, raising the possibility of structural changes to its $31 billion ad business. However, CEO Sundar Pichai remained optimistic, emphasising Google’s focus on innovation and its ability to adapt to regulatory landscapes.

Beyond advertising, Google Cloud contributed $12.26 billion, up 28% year-over-year, though slightly below the $12.27 billion expected. The cloud unit’s margins improved to 17.8%, reflecting growing demand for AI-driven solutions. Alphabet’s “Other Bets” and subscription services, including YouTube Premium and Google One, also showed solid growth, with over 270 million paid subscriptions across its ecosystem.