---
title: "AI business is booming! Alphabet raises capital expenditure guidance again, Q3 cloud backlog orders rise to $155 billion"
description: "Driven by strong advertising and cloud demand, Alphabet's revenue in the third quarter reached $102.35 billion, a year-on-year increase of 16%, exceeding market expectations. The net profit was $2.87 "
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/263391494.md"
published_at: "2025-10-30T00:13:02.000Z"
---

# AI business is booming! Alphabet raises capital expenditure guidance again, Q3 cloud backlog orders rise to $155 billion

> Driven by strong advertising and cloud demand, Alphabet's revenue in the third quarter reached $102.35 billion, a year-on-year increase of 16%, exceeding market expectations. The net profit was $2.87 per share, impacted by fines. The company has once again raised its capital expenditure guidance, expecting it to reach $91 billion to $93 billion, primarily for technology infrastructure such as data centers. Q3 cloud backlog orders rose to $155 billion, demonstrating strong momentum in the AI business

According to Zhitong Finance APP, Alphabet (GOOGL.US) reported better-than-expected third-quarter results. Q3 revenue was $102.35 billion, a year-on-year increase of 16%, exceeding market expectations of $99.89 billion. Adjusted earnings were $3.10, compared to an expectation of $2.33.

Sales also surpassed analysts' expectations, primarily due to the strong performance of its cloud division, which is thriving as AI startups seek Google's support and computing power. **Third-quarter sales (excluding traffic acquisition costs) rose to $87.5 billion. Data shows this figure is higher than the analysts' average expectation of $85.1 billion. Net profit was $2.87 per share, exceeding Wall Street's expectation of $2.26.**

Alphabet's net profit increased to $34.97 billion, or $2.87 per share, compared to $26.3 billion, or $2.12 per share, in the same period last year. In September, Google was fined €3.45 billion by EU regulators for anti-competitive behavior related to its lucrative advertising technology business. This fine impacted its reported net profit.

![8a7bc8d473bfd3265a50eb194552820.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251030/1761782253466298.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

## AI Spending Guidance Raised Again, Backlog Continues to Rise

The company is investing record amounts of money to drive advancements in the field of artificial intelligence and is integrating the capabilities of its large language model, Gemini, into popular products including search. **The company stated that capital expenditures this year will reach $91 billion to $93 billion. Earlier this year, the company had already raised its capital expenditure forecast from $75 billion to $85 billion. Most of this will be used for technology infrastructure such as data centers.**

Alphabet previously stated that third-quarter capital expenditures were $22.4 billion, with actual spending slightly below $24 billion, and analysts expect full-year capital expenditures to be slightly above $84 billion.

CFO Anat Ashkenazi stated during the earnings call with investors on Wednesday: "Looking ahead to 2026, we expect capital expenditures to increase significantly and will provide more details in the fourth-quarter earnings call."

Seeking Alpha analyst Tech Stock Pros stated that given Google's potential growth space, it remains an undervalued stock; the upward revision of capital expenditures to $91 billion to $93 billion for 2025 confirms this view, indicating that its capacity demand is continuously expanding (Google Cloud's backlog is growing, and the user base for Gemini applications is also expanding). This makes Alphabet the second-highest spending top company, whereas its spending was the lowest at the beginning of the year **The Gemini app currently has over 650 million monthly active users, with query volume increasing threefold compared to the second quarter.**

**![b43c9bc98d80e11c044a5324ba1a165.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251030/1761782272460327.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)**

Google's massive investment in artificial intelligence is beginning to translate into business growth momentum, particularly in cloud customers and search advertising. The company believes that its large-scale investments in AI—including funding for new infrastructure, research, and talent—are crucial for competing with major cloud computing rivals like Amazon (AMZN.US) and Microsoft (MSFT.US).

**According to StreetAccount, Google Cloud revenue reached $15.15 billion, a year-on-year increase of 35%, exceeding the expected $14.74 billion. Google Cloud achieved a profit of $3.59 billion, surpassing analysts' previous expectations of $3 billion in operating profit.** This division is widely regarded as Alphabet's strongest growth engine and the clearest indicator of how the AI boom is driving the company's sales. **The company stated that there is still a backlog of orders valued at $155 billion. In July of this year, Alphabet indicated that the backlog had reached $106 billion.**

The cloud business unit has secured significant deals with several AI startups, including a high-profile multi-billion dollar agreement to supply dedicated AI chips to Anthropic. Nevertheless, the scale of this division still lags behind Amazon's AWS and Microsoft's Azure, so its growth rate is expected to be faster.

**Alphabet is accelerating the pace of signing new customers, with the number of new GCP customers increasing nearly 34% year-on-year.** At the same time, the contract amounts signed are larger—during the third quarter of this year, the number of contracts signed exceeding $1 billion is greater than the total for the past two years combined. Additionally, the company is deepening its partnerships with customers: over 70% of existing Google Cloud customers are using AI products, including Banco BV, Best Buy, and FairPrice Group.

## Search Business Stable

**Search advertising revenue reached $56.6 billion, above the average analyst expectation of $55 billion.** This division is the driving force behind Google's overall advertising business and has so far successfully resisted the increasing competition from AI chatbots, but Google must ensure that its search business remains profitable. At the core of its offensive is the company's flagship AI model, Gemini, which Google has rapidly integrated into search and other key products. Earlier this year, the tech giant avoided the worst outcome in a significant federal search antitrust lawsuit, as the case's judge determined that its business faced an increasing threat from AI **According to StreetAccount data, the traffic acquisition cost (TAC) was $14.87 billion, while the expectation was $14.82 billion.**

**![1ff34a92ad71d30638207b2bc099bc6.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251030/1761782225804270.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)**

As competitors, especially OpenAI, launch services such as AI search tools and web browsers, Google faces pressure to prove its ability to profit from advertising in AI answers. Daniel Morgan, senior portfolio manager at Synovus Trust, noted in a report that Google's "search instance share erosion by ChatGPT has eased" in the third quarter. BNP Paribas stock analyst Stefan Slowinski believes that OpenAI's recent restructuring plan will help the company transform into a profitable enterprise, which may also pave the way for advertising in ChatGPT, further intensifying competition with Google.

Tech Stock Pros added: "The third-quarter earnings report confirms that after expanding AI overview and AI models, Google's search position remains unmatched. We believe that the degree of AI integration into Google's monopoly on search will far exceed emerging alternatives, and any resulting panic will be a buying opportunity."

Matt Britzman, senior stock analyst at Hargreaves Lansdown, stated: "The AI overview and AI models have clearly resonated with users, helping to alleviate concerns about Google's core search business being threatened by generative AI."

## Strong YouTube Business

**The video streaming site YouTube, celebrating its 20th anniversary this year, reported revenue of $10.3 billion, exceeding analysts' previous expectation of $10 billion, according to StreetAccount data.** **The company has invested heavily in the podcast space and recently announced that users are now watching video podcasts for a total of 100 million hours daily. Paid subscription users have surpassed 300 million, mainly due to the growth of Google One and YouTube Premium.**

According to Nielsen data, YouTube has ranked first in video viewing time in American households for over two consecutive years. Last month, YouTube live-streamed NFL (National Football League) games for the first time. This exclusive global live broadcast attracted over 19 million viewers and set a new record for the number of concurrent viewers on YouTube Live.

YouTube Shorts has also continued to perform well. In the U.S., the revenue per viewing hour for Shorts now exceeds that of traditional videos on YouTube Alphabet CEO Sundar Pichai stated: "In our 'Made on YouTube' initiative, we launched a series of AI-driven features to help creators enhance their creative efficiency and grow their businesses. AI is streamlining the entire content creation process, from generative video tools and more efficient editing to AI insights that help creators optimize their channels, covering all aspects. We are also leveraging AI to expand video monetization channels, automatically identifying products to make videos more shopping-friendly."

## Other Businesses

**Alphabet's "Other Bets" — a series of futuristic businesses including the life sciences division Verily and the autonomous vehicle company Waymo — reported revenue of $344 million and a loss of $1.43 billion.** This performance exceeded analysts' previous forecast of a $1.2 billion loss. Reports indicate that Alphabet is actively expanding Waymo's business while pushing to spin off other ventures into independent startups rather than integrating them into the parent company.

Waymo plans to launch services in London next year and is working to expand services to Tokyo. The company also announced plans to expand its operations to Dallas, Nashville, Denver, and Seattle, and has obtained permits for fully autonomous driving at San Jose and San Francisco airports. In New York City, autonomous driving tests are also continuing to scale up.

The new Waymo for Business allows companies to offer Waymo as a transportation option for employees. This summer, the company launched Waymo Teens accounts in Phoenix.

Pichai remarked: "We are pleased to see steady growth in usage, with positive feedback from both teenagers and their parents. Waymo is on a strong growth trajectory, and 2026 is expected to be an exciting year."

![1a4eaa2660252e8f51059d04d668d24.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251030/1761782318938736.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Alphabet reported that as of the end of September, its employee count was approximately 190,000, an increase of over 8,000 compared to the same period last year. Its competitor Amazon announced on Tuesday that it would lay off 14,000 employees.

Following the earnings announcement, as of the time of writing, Google's stock price rose 6.4% in after-hours trading. As of Wednesday's close, its stock price reached a new high, having increased 45% year-to-date

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.