Google Reports 14% Growth Fueled by AI Expansion

In its Q2 2025 earnings report, Alphabet (Google’s parent company) announced a 14% year-over-year revenue increase, reaching $96.4 billion. According to CEO Sundar Pichai, this growth is being significantly propelled by AI’s integration across all Google platforms.

“AI is positively impacting every part of the business,” Sundar Pichai, CEO, Alphabet

From Search to Cloud and YouTube, artificial intelligence is now deeply woven into Google’s operations. Features like AI Overviews and AI Mode, both built to enhance search and content experiences, are seeing major traction:

• AI Overviews: Over 2 billion monthly users
• AI Mode: 100+ million monthly active users in the US and India

Gemini’s Rapid Rise

Google’s flagship AI assistant, Gemini, is gaining serious momentum with more than 450 million monthly active users. Notably, daily user requests have jumped over 50% compared to the last quarter, marking a steep climb in engagement.

To support this exponential AI growth, Google has bumped its 2025 capital expenditure projection to $85 billion, an increase of $10 billion.

“Our updated outlook reflects additional investment in servers and an acceleration in the pace of data centre construction,” Anat Ashkenazi, CFO, Alphabet

This investment underscores the rising demand for cloud and AI infrastructure.

Google is pushing its comprehensive AI ecosystem, from model development to real-world applications, under what it calls a “full-stack” approach. Highlights this quarter include:

• Gemini 2.5 models powering advanced tools
• Veo 3, Google’s AI video generator, has helped users create 70+ million videos since May
• Flash-Lite, a lightweight reasoning model, enhances product efficiency

YouTube Shorts and Subscriptions

YouTube continues to be a stronghold for Google’s consumer platforms, especially with Shorts, which now generates 200 billion daily views. Remarkably, in certain regions, Shorts outperform traditional videos in revenue per watch hour. Subscriptions have also shown substantial growth.

AI’s enterprise value is shining through Google Cloud. Over 85,000 businesses are using Gemini tools on the platform, a 35x increase from the previous year. Big names like Capgemini, Target, and BBVA are leveraging AI agents to streamline operations and elevate productivity.

While Google’s AI momentum is strong, regulatory challenges remain. The company is awaiting a ruling in the remedy phase of the DOJ’s antitrust case, where it was previously deemed a monopolist. Still, Pichai remains upbeat:

“This is an incredibly exciting moment for Search,” he said, pointing to a rise in commercial and general queries, especially among younger users, a shift largely credited to AI’s growing role.

Google’s deepening AI footprint, from infrastructure to user experience, is redefining its business model in 2025. As innovation accelerates, so does its impact across industries, audiences, and global markets.