For UK investors eyeing Big Tech as a source of stability in an uncertain market, Alphabet Inc's (NASDAQ:GOOG) latest results were the reassurance they needed, and then some.
The Google and YouTube owner blew past expectations on both revenue and profits, proving that, even with AI disruption and geopolitical headwinds, it still knows how to make money hand over fist.
Alphabet earnings beat expectations in Q1 2025
The numbers were quietly very impressive: Revenue of $90.2 billion, earnings per share of $2.81, and net income up 46% to $34.5 billion. That’s despite softness in YouTube ads and a touch below expectations on cloud revenue.
It didn’t matter. The overall story was one of staggering profitability and momentum, and Wall Street responded, with Alphabet shares jumping more than 5% in after-hours trading.
Why Alphabet matters for UK investors
Why does this matter for investors on this side of the Atlantic? Because Alphabet, like its Big Tech peers, has become a core holding in UK-listed global equity funds and pension portfolios.
If you own a tracker or a growth fund, you likely own Alphabet. And when it performs like this, everyone feels the lift.
Trade war risks cloud Big Tech outlook
Still, there’s a reason investors aren’t getting carried away.
The shadow hanging over Alphabet’s near-perfect quarter isn’t poor execution; it’s politics.
With Donald Trump’s trade agenda ramping back up, concerns are mounting that tariffs and tougher trade terms could drag on demand.
Alphabet’s own business chief, Philipp Schindler, was open about the risks.
The imminent closure of the de minimis import loophole in the US, which has allowed small, sub-$800 packages from places like China to enter the country tariff-free, could mean a hit to ad revenues, especially from Asia-Pacific retailers like Shein and Temu.
That’s not just a niche concern. These companies spend heavily on digital ads to reach American consumers, and if their business models get squeezed by tariffs, Alphabet’s ad revenue could feel the impact. As Schindler put it: “We’re not immune to the macro environment.”
Google Search shows resilience in the AI era
Matt Britzman, senior equity analyst at Hargreaves Lansdown, called it “a strong all-around performance”, with Alphabet still the “king of search” despite growing scepticism around how search will evolve in an AI-first world.
Crucially, he noted, AI-generated overviews are not just popular - they’re monetising on par with traditional search queries. That’s a meaningful sign that Google’s ad machine is adapting rather than being disrupted.
Still, Britzman warned, the bear case hasn’t vanished. “Search growth has been gradually slowing,” he said. “And while this quarter didn’t throw fuel on the bear case, it didn’t extinguish it either.”
Alphabet doubles down on AI and cloud investment
On capital spending, however, Alphabet didn’t flinch.
It reaffirmed plans to splash out $75 billion on data centres and infrastructure in 2025, a clear signal to AI bulls that it’s not pulling back.
“There were some fears the company might tighten the purse strings given a softer macro backdrop,” Britzman said.
“But instead, the message was clear: demand, particularly in cloud, remains high, and supply is struggling to keep up.”
That backlog should ease in the second half of the year, he added, welcome news for suppliers like Nvidia and other AI ecosystem players.
Outlook: Full steam ahead, but geopolitical risks remain
The frustration, though, was the lack of clarity on how trade tensions might hit ad demand down the line. “Investors hoping for insight into tariffs were left wanting,” Britzman said. “For now, Alphabet’s focus remains singular: win the AI race.”
For UK investors, the takeaway is unchanged.
Alphabet remains a cornerstone of growth portfolios with rock-solid margins and a forward-looking strategy.
But with Trump’s tariffs looming and global trade politics in flux, even the most profitable tech giants may be riding a wave they can’t entirely control.