Alphabet Inc. Q3 FY2025 earnings call

AI Infrastructure: Scaling advanced chips like NVIDIA GPUs and own TPUs, shipping new A4X Max instances and 7-generation TPU Ironwood. Investing in TPU capacity to meet demand, with Anthropic planning to access up to 1 million TPUs. ### World-class AI Research: Leading models like Gemini 2.5 Pro, Veo 3, Genie 3, and Willow quantum chip breakthrough. ### Products and Platforms: Gemini app has over 650M monthly active users, Cloud backlog up 46% to $155B, over 300M paid subscriptions led by Google One and YouTube Premium. ### Search: AI Overviews driving query growth, AI Mode with 75M daily active users, queries doubled in Q3. ### Cloud: Accelerating growth with AI revenue as key driver, over 70% of existing Cloud customers use AI products, revenue from generative AI models up over 200% YOY. ### YouTube: #1 in U.S. streaming watch time, first live NFL broadcaster, Shorts earning more revenue per watch hour than traditional in-stream, AI-powered content creation tools. ### Waymo: Expansions to cities, Waymo for Business, Waymo teens accounts launched.

Google Services revenues increased 14% to $87.1 billion. Google Search and other advertising revenues rose 15% to $56.6 billion. YouTube advertising revenues grew 15% to $10.3 billion, while network advertising revenues were down 3%. Subscriptions, platforms and devices revenues increased 21% to $12.9 billion. Google Cloud segment revenue was up 34% to $15.2 billion, with backlog at $155 billion, up 46% quarter-over-quarter. Other Bets had revenues of $344 million and an operating loss of $1.4 billion.

CapEx: Expect CapEx in 2025 to be $91-93B, up from previous $85B estimate. ### Revenues: Fourth quarter revenues may be negatively impacted by U.S. election spend, but FX could provide tailwind. ### Cloud: Demand remains high, expect tight demand-supply in Q4 2025 and 2026. ### Depreciation: Expect depreciation to continue increasing due to heavy infrastructure investments.

Q: On agentic e-commerce and travel monetization, what factors ensure smooth transition?

A: Philipp Schindler says agentic experiences are additive, focusing on seamless user experience and integrating partner ecosystems.

Q: How far from Waymo integration with Gemini?

A: Sundar Pichai says scheduled to review in a few weeks, excited about potential in-car experience improvements.

Q: Drivers of core search strength and monetization in AI formats?

A: Philipp Schindler notes Search revenues grew across verticals, AI Overviews scaled to 2B users, monetization at similar rates.

Q: Opportunities in cost base to absorb infrastructure growth?

A: Anat Ashkenazi mentions moderating headcount, optimizing real estate, and optimizing technical infrastructure build-out.

Q: Custom silicon opportunity and YouTube subscription scaling?

A: Sundar Pichai says custom silicon drives growth, Philipp Schindler talks about YouTube's twin engine monetization with ads and subscriptions.

Q: Differences in AI Overviews and Mode engagement?

A: Sundar Pichai says AI Overviews have high engagement, AI Mode has early adopters with strong resonance.

Q: Impact of longer queries in AI Mode on ROAS?

A: Philipp Schindler says too early to tell, testing ongoing.

Q: ROIC and long-term spending returns?

A: Anat Ashkenazi says rigorous framework for evaluating long-term investments, seeing returns in Cloud and other areas.

Q: AI Max impact on commercial queries?

A: Philipp Schindler says AI Max improves advertiser targeting, Sundar Pichai says AI Overviews expand query breadth.

Q: Pace of frontier model innovation and cloud deal economics?

A: Sundar Pichai says pace of innovation is phenomenal, cloud deals show strong momentum with favorable long-term economics.