Alphabet hits $100B quarterly revenue while boosting AI spending to $93B

Google’s parent company Alphabet reported its first-ever $100 billion quarterly revenue, beating Wall Street estimates as strong demand for advertising and cloud services drove growth. The tech giant’s milestone quarter comes as it significantly increases AI infrastructure spending, raising capital expenditure guidance to between $91 billion and $93 billion for the upcoming year—up from an original $75 billion forecast in February.

What you should know: Alphabet’s third-quarter performance exceeded analyst expectations across key business segments.

• Total revenue reached $102.35 billion, surpassing the average analyst estimate of $99.89 billion according to LSEG, a financial data provider.
• Google Cloud emerged as one of the fastest-growing segments with $15.16 billion in revenue, topping estimates of $14.72 billion.
• The company’s advertising unit, which generates the majority of Alphabet’s revenue, maintained steady growth despite a crowded competitive landscape.

The big picture: Alphabet is making massive infrastructure investments to support its AI ambitions, with nearly all of the increased capital expenditure targeting datacenters and AI-supporting infrastructure.

• The spending increase reflects how artificial intelligence products are becoming integral to the company’s business strategy.
• Google Cloud continues closing the gap with larger rivals Microsoft Azure and Amazon Web Services, aided by strong adoption of Vertex AI and custom tensor processing units.

Competitive landscape: The results come amid intensifying competition in both AI and cloud markets, with rivals aggressively cutting prices and introducing new generative AI capabilities.

• Microsoft and SoftBank Group-backed OpenAI recently unveiled their AI-powered Atlas browser, directly targeting Google’s search engine and Chrome browser dominance.
• This launch represents one of the most significant challenges to Google’s search business in years, making management’s response to competitive threats a key focus for investors.

Market dynamics: Advertising demand shows mixed signals as economic uncertainty affects spending patterns.

• Lower interest rates are expected to lift the economy and benefit ad spending overall.
• However, some advertisers remain cautious due to economic uncertainty from tariff costs and evolving global trade dynamics.
• Wall Street expects Alphabet to benefit as advertisers move away from experimental platforms like Snapchat toward more established options.

Why this matters: The milestone quarter demonstrates Alphabet’s ability to generate massive revenue while simultaneously investing heavily in AI infrastructure, positioning the company for future growth as artificial intelligence becomes increasingly central to its business model and competitive strategy.