Alphabet’s (NASDAQ:GOOGL) Q3 Sales Top Estimates

Online advertising giant Alphabet (NASDAQ:GOOGL) reported Q3 CY2025 results beating Wall Street’s revenue expectations , with sales up 15.9% year on year to $102.3 billion. Its GAAP profit of $2.87 per share was 26.9% above analysts’ consensus estimates.

Is now the time to buy Alphabet? Find out in our full research report.

Alphabet (GOOGL) Q3 CY2025 Highlights:

Revenue: $102.3 billion vs analyst estimates of $99.9 billion (2.4% beat) Operating Profit (GAAP): $31.23 billion vs analyst estimates of $32.13 billion (2.8% miss) EPS (GAAP): $2.87 vs analyst estimates of $2.26 (26.9% beat) Google Search Revenue: $0.03 vs analyst estimates of $55.04 billion (2.8% beat) Google Cloud Revenue: $0.03 vs analyst estimates of $14.77 billion (2.6% beat) YouTube Revenue: $10.26 billion vs analyst estimates of $10.02 billion (2.4% beat) Google Services Operating Profit: $0.01 vs analyst estimates of $33.28 billion (small beat) Google Cloud Operating Profit: $0.19 vs analyst estimates of $3.01 billion (19.3% beat) Operating Margin: 30.5%, down from 32.3% in the same quarter last year Free Cash Flow Margin: 23.9%, up from 20% in the same quarter last year Market Capitalization: $3.24 trillion

Revenue Growth

Alphabet shows that fast growth and massive scale can coexist despite conventional wisdom. The company’s revenue base of $171.7 billion five years ago has more than doubled to $385.5 billion in the last year, translating into an incredible 17.6% annualized growth rate.

Alphabet’s growth over the same period was also higher than its big tech peers, Amazon (15.2%), Microsoft (14.8%), and Apple (8.4%). Comparing the four is relevant because investors often pit them against each other to derive their valuations. With these benchmarks in mind, we think Alphabet is a bit expensive (but still worth owning).Quarterly Revenue of Big Tech Companies

Long-term growth reigns supreme in fundamentals, but for big tech companies, a half-decade historical view may miss emerging trends in AI. Alphabet’s annualized revenue growth of 13.9% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.Alphabet Year-On-Year Revenue Growth

This quarter, Alphabet reported year-on-year revenue growth of 15.9%, and its $102.3 billion of revenue exceeded Wall Street’s estimates by 2.4%. Looking ahead, sell-side This projection is still healthy and illustrates the market sees some success for its newer products.

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Google Search: Alphabet’s Bread-and-Butter

The most topical question surrounding Alphabet today is: “Will new Generative-AI products like ChatGPT and Meta AI disrupt Google Search and its 80%+ market share?”.

Although OpenAI (creator of ChatGPT) doesn’t disclose its financials, we can gain further insight by comparing Google Search to Meta and Microsoft’s Bing. Meta essentially has a monopoly in social media advertising and is creeping into search with Meta AI, which is powered by its Llama large language model, while Bing is the distant number two search engine that benefits from its integration with ChatGPT.

Starting with Alphabet, Google Search is by far the most considerable portion of its revenue at 55.9%, and it grew at a 16.8% annualized rate over the last five years, in line with its total revenue. The previous two years saw deceleration as it grew by 12.7% annually, though this isn’t concerning since it’s still expanding quickly.

On the other hand, its two-year result was lower than Meta’s 22.2%, showing digital advertising dollars could be flowing to Meta because of its improved AI algorithms and targeting capabilities. Alphabet bulls would argue this trend could reverse because the return on investment from keyword-driven advertising is more tangible, but that hasn’t been the case lately.Google Search and Meta Quarterly Revenue

Quarterly performance is particularly relevant for Alphabet because it captures the growth of AI and signals whether investors are overestimating its competitive impact. Bulls can rejoice as Google Search revenue exceeded expectations in Q3, outperforming Wall Street Consensus by 2.8%. The segment recorded a hearty year-on-year increase of 14.5%.

While this was slower than Bing’s 20%, it’s important to consider that Bing has a much smaller revenue base and doesn’t pose a significant threat yet. Still, Alphabet must continue topping Wall Street’s Google Search projections and performing well in other segments like Google Cloud Platform and YouTube to win the debate.

Key Takeaways from Alphabet’s Q3 Results

We were impressed by how significantly Alphabet blew past analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its operating income missed. Zooming out, we think this was a solid print. The stock traded up 4.7% to $288 immediately following the results.

Sure, Alphabet had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.

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