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Google parent Alphabet smashed analysts’ estimates yesterday, posting first-quarter earnings per share of $2.81, versus a FactSet consensus estimate of $2.01, and revenue of $90.2 billion, versus the Street’s $89.17 billion projection. For Q1 2025, Alphabet’s revenue grew 12% year over year to $90.2 billion.Let’s break down the results for Alphabet’s many divisions:

YouTube’s Q1 ad revenue grew 10% to $8.9 billion.  Google Cloud revenue was up 28% to $12.3 billion.  Google’s search business brought in $50.7 billion, up 10%.  Google advertising revenue was $66.9 billion, a 8.5% increase year over year.

That said, not all is going splendidly over at the advertising juggernaut: it’s facing headwinds from its lost monopoly battles, which could potentially force the breakup of the company, and problems from tariffs, which indirectly affect its advertising business.  Worse, how it fares is considered a harbinger of how other megacap tech stocks might perform this quarter.

THE TAKEAWAY The real worry, though? It’s probably not a coincidence that CEO Sundar Pichai harped on AI engagement, flogging the stat that Google was seeing 1.5 billion users per month interact with the tech. Google may be rich, with vast flows of coin coming in and a big moat called “Google Search,” but there are barbarians at the gate in the form of OpenAI’s ChatGPT and the likes of Perplexity making a direct play for the search crown. Google has said it plans to spend $75 billion in capex this year, mostly to bolster its AI efforts.