Most observers want to know how AI contributes to revenue growth at Alphabet and other firms, and the most-recent earnings report issued by Alphabet on April 25, 2025. So what might we conclude, based on that call?
Clearly, Alphabet management positioned AI features as central to Alphabet’s revenue and profit growth. In the key search business(AI Overviews and Circle to Search), management pointed to significant ad revenue driven by increased engagement, with “stable” monetization. That is presumably meant to reassure investors that monetization, even if indirect, is not cannibalizing traditional search.
Likewise, the Gemini language model, which powers both consumer and enterprise products, boosts Cloud and Workspace product adoption.
Obviously Waymo leverages AI for operational efficiency but is not a material revenue source, yet.
The takeaway might be that AI monetization, especially for AI Overviews and Circle-to-Search, already is happening, even if indirectly, and does not cannibalize the core advertising business, which has been a concern analysts and investors have noted.
Gemini’s enterprise applications likewise are said to be driving Google Cloud revenues.
AI Overviews, powered by Gemini might have contributed to double-digit revenue growth in search, with first quarter 2025 Search revenue reaching $50.7 billion, up 9.8 percent year-over-year.
Ads integrated into AI Overviews are monetizing at roughly the same rate as traditional Search ads, Google indicated, suggesting no cannibalization of revenue.
In Google Cloud, Gemini powers the Vertex AI platform, which saw a five-fold year-over-year increase in customers in the fourth quarter of 2024 and a 20-fold growth over the full year. Google Cloud’s $12.26 billion revenue in the first quarter of 2025 shows revenues up 28 percent year-over-year).
As often seems to be the case, AI monetization is largely indirect, contributing to the growth or profitability of other products using AI.
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