Financial Key Figures
Alphabet posted impressive quarterly figures for Q1 2025. Revenue reached $90.23 billion, representing a 12% increase compared to the previous year and surpassing analyst expectations of $89.1 billion. There was also a substantial net profit growth of 46% to $34.54 billion, fueled by an unrealized book profit of approximately $8 billion from the SpaceX stake.
Operational Performance
A remarkable increase in operating profit of 20% to $30.6 billion at a record margin of 33.9% underscores Alphabet’s efficiency. Free cash flow grew by 12.6% to $18.95 billion despite higher investments.
Segment Analysis
In the Google Services segment, including search advertising and YouTube, revenue of $77.26 billion was achieved. Search advertising grew by 10%, while YouTube’s growth slightly decreased to 10%.
Interestingly, Sundar Pichai emphasizes the “positive momentum” in the cloud and subscription area, strengthened by AI and cloud solutions, although detailed specifics are lacking.
Market Reaction & Valuation
Following the release of positive results, there were after-hours gains in stock prices. Alphabet remains attractive to German-speaking investors through ADRs, thanks to strong free cash flow with potential for dividend increases and stock buybacks.
Critical Assessment of the Numbers
Although the numbers are strong, there are signs of concern: YouTube’s growth is gradually slowing, which could indicate competition from platforms like TikTok. Additionally, part of the profit effect is due to one-time effects. Nevertheless, the adjusted operating result remains stable.
For investors, the consistent margin alongside AI-driven cloud growth is essential, which could influence future valuation multiples in the technology sector.