Alphabet (GOOGL) Q1 2025 Earnings: Cloud Profits, First Dividend, and What It Means for Canadian Investors

Ticker: GOOGL (NASDAQ)
Market Cap: ~$2.1 trillion (as of May 2025)
Sector: Communication Services

Q1 2025 Highlights

Alphabet delivered a strong Q1 on April 25, 2025, beating both revenue and earnings expectations. This was a breakout quarter for the tech giant, which also announced its first-ever dividend and a $70B stock buyback.

Key Numbers (vs. expectations)

✅ Strengths

Alphabet’s Q1 2025 earnings revealed several clear strengths that highlight the company’s evolution from a high-growth tech firm into a more mature, balanced business. These strengths span profitability, core advertising resilience, and an important shift toward rewarding shareholders.

Google Cloud Turns Profitable

For years, Google Cloud was seen as Alphabet’s “catch-up” segment — a division investing heavily to close the gap with Amazon Web Services (AWS) and Microsoft Azure. In Q1 2025, that narrative changed.

Google Cloud delivered $11.5 billion in revenue, up 20% year-over-year. More importantly, it posted $900 million in operating profit. That’s a big shift from prior quarters where the segment was barely breaking even. This performance also marked the third consecutive quarter of profitability for the cloud division.

What’s driving this improvement? First, enterprise customers are adopting Google’s AI-driven tools, like Gemini for business and Vertex AI, as cloud becomes the backbone of digital transformation. Second, Google has been improving its operational efficiency, cutting excess costs while expanding margins.

For investors, this means the cloud is no longer a cost centre. It’s a high-growth, high-potential revenue stream that is becoming a pillar of long-term profitability.

Search and Ads Still Lead

Despite rising competition from platforms like TikTok and AI-powered search alternatives, Alphabet’s core ad business remains robust. In Q1, Google Search ad revenue grew 13% year-over-year, showing resilience in a tough macro environment.

The driver here is twofold. First, demand from retail advertisers remains strong, especially in sectors like e-commerce and travel. Second, Alphabet is leveraging artificial intelligence to improve ad targeting and user experience. Features like Search Generative Experience (SGE) are already being tested to show AI-enhanced answers with ads integrated natively.

This segment continues to deliver strong operating margins, supporting Alphabet’s overall margin expansion to 32% in Q1. Even as newer AI products emerge, Alphabet’s traditional business remains a reliable cash flow engine.

Shareholder Returns Begin

Perhaps the most significant strategic shift this quarter was Alphabet’s decision to initiate a dividend and expand its share buyback program.

The company declared its first-ever dividend of $0.20 per share, a signal that Alphabet is entering a more mature phase of its lifecycle. While small in size for now, it opens the door to recurring income for investors — especially attractive to Canadian retirees or dividend-focused investors holding U.S. stocks.

In addition, Alphabet announced a $70 billion stock repurchase plan, one of the largest buybacks in the tech sector. This helps boost earnings per share (EPS) by reducing the share count and reflects the company’s confidence in its long-term value.

Combined, these actions show that Alphabet is no longer just reinvesting for growth — it’s also returning capital to shareholders, making it more attractive to a broader base of investors.

⚠️ Weaknesses

YouTube Still Facing Competition

Despite 20% growth, YouTube is under pressure from TikTok. Monetization of Shorts is still lagging, and engagement from younger demographics is shifting.

Ongoing Antitrust Risks

Alphabet faces several antitrust lawsuits in the U.S. and Europe, targeting its dominance in search and advertising. Regulatory pressure could impact long-term margins.

Rising AI-Related CapEx

Capital expenditures rose to $12 billion (up 40% YoY), driven by data centres and custom AI chips. Heavy investment is necessary but impacts free cash flow.

📈 Key Financial Ratios

🔮 Outlook and Prospects

Alphabet is balancing growth with profitability. Its AI-first strategy—from Gemini to Google Workspace—is gaining traction. Cloud and advertising are both benefiting from AI innovation.

Key Growth Drivers

• Enterprise AI adoption through Google Cloud
• AI-enhanced search and advertising
• Recurring shareholder returns through buybacks and dividends

That said, investors should watch out for regulatory actions, TikTok competition, and rising AI costs.

🇨🇦 How Canadian Investors Can Buy Alphabet Stock

Canadian investors have multiple ways to invest in Alphabet, depending on their goals and preferences.

Buy Directly on the NASDAQ (USD)

You can buy GOOGL or GOOG shares directly through most Canadian brokerages (Wealthsimple, Questrade, RBC, etc.) in U.S. dollars.

• GOOGL = Class A (voting rights)
• GOOG = Class C (no voting rights)

Note: Currency conversion fees may apply.

Invest via Alphabet CDR in CAD

Alphabet is available as a Canadian Depository Receipt (CDR) on the NEO Exchange under the symbol GOOG.NE.

• Trades in Canadian dollars
• Built-in currency hedge
• Lower share price (fractional exposure)

CDRs are a convenient way to hold U.S. stocks without worrying about FX or high share prices.

Buy ETFs That Hold Alphabet

For broader exposure, Canadians can buy ETFs that include Alphabet:

🧠 Final Take

Alphabet’s Q1 2025 results were strong across the board—cloud is now profitable, search ads are stable, and AI investment is beginning to pay off. The introduction of dividends and buybacks marks a shift toward mature tech leadership.

For Canadian investors, the stock is accessible in multiple formats, whether you’re looking for direct ownership, CDRs, or ETF exposure.