Advertising revenue rose sharply with higher impressions and higher price per ad, while a separate segment tied to AI and experimental products posted a large operating loss. Capital expenditures increased due to higher component pricing and data center costs, and free cash flow growth slowed. Search and YouTube advertising also grew, while cloud revenue surged and backlog nearly doubled. Paid subscriptions expanded across consumer and enterprise offerings, and enterprise AI usage increased with large token processing volumes. Autonomous ride volumes rose as well. Capital expenditures more than doubled and free cash flow declined, yet market performance favored Alphabet over Meta after results.
"Advertising revenue hit $55.02 billion, up 33%, with ad impressions +19% and price per ad +12%. Mark Zuckerberg called it "a milestone quarter" tied to the first model from Meta Superintelligence Labs. Reality Labs, however, posted a $4.03 billion operating loss on just $402 million of revenue. That math still stings."
"Alphabet showed a wider hand. Search grew 19% to $60.40 billion, YouTube ads added 11%, and Google Cloud surged 63% to $20.03 billion with backlog nearly doubling to over $460 billion. Sundar Pichai said "AI investments and full stack approach are lighting up every part of the business.""
"Meta is doubling down on a single engine. The CapEx range got raised by $10 billion, citing higher component pricing and data center costs. Free cash flow still grew, but only 11.74% to $12.39 billion. The EPS headline of $10.44 was inflated by a $8.03 billion tax benefit worth $3.13 per share."
"Alphabet is monetizing AI through paying customers. 350 million paid subscriptions across YouTube and Google One, Gemini Enterprise paid users +40% QoQ, and Gemini APIs now process 16 billion tokens per minute, up 60%. Waymo crossed 500,000 autonomous rides per week. The cost? CapEx more than doubled to $35.67 billion and free cash flow fell 46.6%."
#ai-infrastructure-spending #digital-advertising #cloud-computing #subscription-monetization #free-cash-flow-and-capex
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