TLDR
- Alphabet’s Google Cloud revenue jumped 32% to $13.6 billion with operating profit more than doubling to $2.8 billion
- The company increased 2025 capital spending by $10 billion to $85 billion to meet cloud demand exceeding current capacity
- Broadcom’s AI chip revenue topped $5 billion, growing 63% year-over-year and representing one-third of total revenue
- Google maintains over 90% search market share while AI Overviews feature drives 10% increase in global queries
- Both companies trade below typical AI stock valuations despite strong growth metrics and market caps totaling $4.7 trillion
Two tech giants are reporting strong quarterly results as artificial intelligence drives demand for their products and services. Alphabet and Broadcom have reached combined market valuations of $4.7 trillion.
Alphabet controls over 90% of the global search market through Google. The company’s Chrome browser and Android operating system each hold more than 70% market share. This positions Google as the primary internet gateway for most users outside China.
Initial concerns about AI chatbots reducing search traffic have not materialized. Alphabet integrated AI throughout its product lineup instead. Features like Circle to Search, Google Lens, and AI Overviews are boosting user engagement and query volume.
The AI Overviews feature is generating a 10% increase in worldwide search queries. This growth translates directly into higher advertising revenue for the company.
Google Cloud Revenue Accelerates
Google Cloud posted $13.6 billion in revenue last quarter, up 32% from the prior year. Operating profit reached $2.8 billion, more than double the year-ago figure.
The cloud division benefits from Alphabet’s vertical integration approach. The company built its own Gemini language model, custom AI chips, data centers, and fiber network infrastructure. This strategy provides cost benefits and performance advantages competitors cannot easily replicate.
Current demand for Google Cloud services outpaces available supply. Alphabet raised its 2025 capital expenditure budget by $10 billion in response. The new $85 billion spending plan targets infrastructure expansion to meet customer requirements.
Google Cloud customers increased 28% year-over-year last quarter. The company is also launching Gemini for Business, allowing enterprises to deploy AI agents without coding knowledge. This puts Alphabet in direct competition with Microsoft for corporate AI customers.
Broadcom AI Chip Sales Surge
Broadcom generates $60 billion in annual revenue across its semiconductor portfolio. AI chip sales exceeded $5 billion last quarter, accounting for roughly one-third of the business. This segment grew 63% compared to the previous year.
Strong demand for custom AI accelerators and data center networking equipment has pushed Broadcom’s stock up 54% year-to-date. The company’s market capitalization now stands at $1.7 trillion.
Broadcom’s non-AI semiconductor business reported flat revenue last quarter. Company executives forecast a gradual recovery in these markets beginning around mid-2026. The product mix includes components for wireless communications, servers, storage systems, and industrial automation.
Over the past decade, Broadcom has delivered 28% annualized growth in both revenue and earnings per share. Financial analysts project similar growth rates continuing over the next several years.
Valuation Analysis
Despite robust growth, both stocks trade at reasonable valuations relative to peers. Alphabet’s forward price-to-earnings ratio sits below 23 based on 2026 analyst estimates. This represents a discount compared to most large-cap AI technology companies.
Broadcom’s consistent execution and diversified business model support its current valuation. The pending recovery in non-AI markets could provide additional upside for investors.
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