What Google’s Q1 Earnings Reveal Concerning the Way forward for Search and AI

Google’s father or mother firm, Alphabet, reported better-than-expected Q1 2025 outcomes on Thursday, April 24, posting stable efficiency throughout Cloud, Adverts, and Search. Shares jumped as a lot as 4.3% as markets reopened Friday, including $75 billion to the corporate’s market worth.

However the actual story wasn’t simply within the numbers. It was in what Google selected to focus on.

The firm used its Q1 earnings name and report back to highlight its deepening deal with AI: AI Overviews now attain 1.5 billion customers a month, the brand new “AI Mode” is driving longer, extra complicated search queries, and Gemini 2.5 is being positioned because the business’s main mannequin.

In the meantime, Workspace delivers over 2 billion AI assists month-to-month, and Google Cloud’s momentum continues, powered by its AI-native stack, together with Vertex AI and Gemini-powered brokers.

And all this comes simply because the DOJ (Division of Justice) pushes to interrupt up Google’s search monopoly, calling for a divestment of Chrome. Add the mounting competitors from Microsoft, OpenAI, and Amazon, Google’s Q1 focus was not nearly innovation, however reinforcing its management over the platforms and interfaces that outline how customers work together with the web.

For SaaS distributors, it’s a sign that discovery, distribution, and product interplay are being rebuilt round AI-native expectations, and Google is positioning itself on the middle of that shift.

Google’s AI stack: From fashions to monetization

If Q1 made something clear, it’s that Google is now not treating AI as an overlay. It’s embedding it throughout each layer of its enterprise, from the consumer interface to the silicon that powers it.

This comes as AI adoption accelerates throughout the broader software program panorama. As of early 2025, G2 tracks over 4,000 AI merchandise across 38 AI classes, with greater than 100,000 evaluations in these classes alone – a transparent reflection of how deeply AI is turning into embedded in enterprise workflows.

Gemini’s increasing position throughout Google merchandise

On the coronary heart of Google’s AI technique is Gemini, the corporate’s superior AI fashions, with the most recent Gemini 2.5 Professional mannequin launched in March. Gemini fashions energy 15 Google merchandise, every with over 500 million customers, together with Workspace, YouTube, Android, and Search.

This mannequin integration is already altering how customers work together with Google merchandise. Google Workspace now delivers greater than 2 billion AI assists per thirty days. Gemini can also be changing Google Assistant on cell units, with updates deliberate for tablets, automobiles, and different linked units later within the 12 months.

Google additionally reported robust developer momentum. For the reason that begin of the 12 months, utilization of AI Studio and the Gemini API has grown by over 200%. On the similar time, its open-source Gemma fashions, geared towards flexibility and customization, have been downloaded greater than 140 million occasions.

Maybe crucial evolution is going on under the floor, on the infrastructure layer. The true flex in Google’s newest earnings name isn’t Gemini or Chatbot Area rankings. It’s the revelation that Google’s AI infrastructure is now a strategic moat, many years within the making.

The infrastructure layer

In April, Google introduced Ironwood, its seventh-generation Tensor Processing Unit (TPU), designed particularly for inference at scale. The chip delivers a 10x enchancment in compute efficiency over its predecessor and is almost twice as energy environment friendly — developments that purpose to handle the fee and scalability challenges of deploying giant AI fashions in manufacturing environments.

However this is only one layer. Google’s AI stack sits atop one of many world’s most sturdy networks of over 2 million miles of fiber optic cables and 33 subsea cable methods. Whereas many LLM startups race to shave off milliseconds of inference latency, Google is quietly optimizing the worldwide motion of huge, multimodal knowledge at scale. That type of management turns into a critical edge when customers anticipate instantaneous responses from 10-billion-parameter fashions wherever on the earth.

This infrastructure powers Google’s broader enterprise AI platform, which now consists of:

• Vertex AI, providing entry to greater than 200 basis fashions, together with Google’s personal in addition to third-party fashions like Llama 4 and Anthropic’s Claude.
• Instruments just like the Agent Growth Equipment and Agent Designer, which assist firms construct AI brokers with low-code orchestration throughout 100+ enterprise methods.
• Prepackaged AI brokers for customer support, software program growth, and inner information administration.

What does Google’s full-stack AI push imply for SaaS firms?

For SaaS firms, this isn’t only a technical evolution. It’s a basic repositioning of Google as each platform and companion, not simply in internet hosting workloads, however in shaping how enterprise software program is constructed and skilled. Listed here are the important thing takeaways:

• AI is turning into the baseline expectation, not a premium function. With Gemini built-in throughout Google’s core merchandise, customers will more and more anticipate AI-driven performance by default. For SaaS distributors, this shifts product technique from “ought to we add AI?” to “how will we differentiate when everybody has it?”
• AI assistants are the brand new integration floor. As Gemini replaces Google Assistant and will get embedded throughout Android and Workspace, SaaS instruments might must rethink how they combine — not as standalone apps, however as duties routed by way of conversational or intent-based brokers.
• Proudly owning the infrastructure stack is Google’s long-term recreation. The discharge of Ironwood TPUs and the deal with inference effectivity present that Google is investing in long-term management of AI economics. Software program firms relying on AI infrastructure ought to anticipate extra bundling.

Search and discovery are being rewritten

For years, Google Search has been the entrance door to the web. Two billion folks search on Google each day, and 5 trillion searches are completed yearly, in accordance with Google. For a lot of software program firms, it’s additionally been the entrance door to buyer acquisition. Q1’s commentary confirmed that this door is being redesigned in a giant method, and AI is shaping the blueprint.

AI Overviews and AI Mode reshape how folks search

AI Overviews, the function that summarizes solutions on the prime of search outcomes, now reaches 1.5 billion customers per thirty days. 

“Almost a 12 months after we launched AI Overviews within the U.S., we proceed to see that utilization progress is rising as folks be taught that Search is extra helpful for extra of their queries.”

Sundar Pichai
CEO of Google and Alphabet

Alongside this, the experimental AI Mode, launched in Labs, pushes additional by including superior reasoning and multimodal capabilities. It’s constructed to assist customers discover questions that require comparisons, deeper context, or extra open-ended enter.

In accordance with Google, customers are already participating in another way. AI Mode queries are twice so long as conventional ones. This shift is not only technical. It displays a broader change in how folks search and the way companies get found.

Google has famous that AI Overviews monetize at a price just like normal search outcomes. However the nature of those summaries means much less scrolling and extra direct solutions. 

For software program firms that rely on natural visibility, this can be a significant change. The highest of the web page might now not be a listing of hyperlinks. As an alternative, it turns into a curated snapshot, the place inclusion is dependent upon how Google’s AI interprets your model, content material, or positioning.

Multimodal search is rising quick

On the similar time, Google is increasing multimodal search behaviors. Visible queries by way of Lens have grown by 5 billion since October. The Circle to Search function, which lets customers draw or faucet on a part of their display to provoke a question, is now stay on over 250 million units and noticed utilization develop 40% in Q1.

These modifications sign that search is now not confined to the search bar. Customers are discovering by way of pictures, gestures, voice, and hybrid interactions that mix inputs throughout apps and units.

What does the AI search period imply for SaaS GTM and website positioning technique?

For SaaS entrepreneurs, product groups, and GTM leaders, the shifts in Google search are removed from summary. They affect how software program merchandise are researched, how options are in contrast, and the way buy intent is shaped. Methods constructed round conventional website positioning and click-based conversion flows might must adapt shortly as AI-driven summarization turns into the brand new default.

Google didn’t body these updates as a reimagining of discovery. However when customers ask completely different sorts of questions and obtain fewer, quicker solutions, the downstream results on how merchandise are surfaced might be onerous to disregard.

For software program firms, the important thing takeaways are:

• Visibility is altering. AI Overviews and AI Mode scale back hyperlink surfaces and shift the foundations of engagement for natural discovery.
• Being a part of the reply issues. As summaries substitute lists, inclusion in AI-generated responses might turn into extra impactful than conventional rankings. Search conduct is evolving.
• Longer, extra conversational queries and new visible search instruments imply discovery is going on throughout extra modalities, not simply textual content. Entrepreneurs might want to adapt shortly.
• website positioning methods and attribution fashions constructed round legacy search patterns will want rethinking as AI reshapes the highest of the funnel.

Cloud momentum continues amid doubts

Heading into Q1, the cloud business was navigating a wave of skepticism. After months of aggressive AI infrastructure funding, there have been some questions on whether or not demand was leveling off. A number of hyperscalers have signaled a extra measured tempo of capital expenditures, amid rising issues over underutilized compute sources, delayed AI deployments, and unsure monetization timelines.

Towards that backdrop, Google Cloud reported 28% progress, reaching $12.26 billion in income for the quarter. Whereas slightly below analyst estimates, the outcomes nonetheless level to regular momentum, particularly in a aggressive atmosphere the place patrons consider AI investments extra critically.

That scrutiny is warranted, however momentum stays. In accordance with G2’s 2024 Purchaser Conduct Report, 52% of patrons anticipate their software program budgets to develop in 2025, and 83% of those that adopted AI platforms within the final three months already report constructive ROI.

Regular progress, at the same time as AI hype ranges out

Google emphasised that a lot of this progress is being pushed by AI-specific workloads, significantly in deployment and inference, relatively than simply experimentation.

The corporate’s funding in AI-native infrastructure, together with its Ironwood TPUs and early entry to NVIDIA’s Blackwell GPUs, is aimed toward supporting this shift as enterprises transfer past pilots into extra operational use instances.

The story stays considered one of gradual integration. Google is positioning itself as a long-term participant within the enterprise AI market, supported by tooling and efficiency capabilities, however actual enterprise transformation continues to be unfolding in phases.

Strategic implications for software program distributors

For software program firms, the important thing takeaways are:

• Cloud progress is actual, however expectations are resetting. Consumers are below strain to indicate ROI from AI, which implies SaaS merchandise that drive measurable outcomes will resonate greater than these targeted on experimentation alone.
• Differentiation is shifting from uncooked compute to usability. Google’s deal with brokers, APIs, and deployment frameworks highlights that the cloud race now consists of developer expertise and ecosystem alignment.
• Multi-cloud methods and openness matter. As Google integrates third-party fashions like Llama 4 and Claude, it alerts consciousness that prospects need optionality, and distributors ought to suppose equally.

Trying ahead: The brand new guidelines of progress are being written in AI

Google’s Q1 report wasn’t only a efficiency replace. It was a map of the place the digital panorama is heading and a preview of how core features like search, software program integration, and enterprise infrastructure are being reshaped by AI.

From Gemini-driven interfaces to evolving cloud economics to regulatory scrutiny, the foundations that outlined the previous decade of software program progress are altering. For SaaS firms, product groups, and GTM leaders, now’s the time to reassess the place your visibility, attain, and platform dependencies sit in a quickly shifting ecosystem.

At G2, we’re monitoring how software program patrons and distributors alike are adapting to this new atmosphere, together with how AI is influencing product discovery, buying conduct, and class dynamics.

Discover real-time software program developments and vendor insights on G2. As a result of when the platforms shift, the technique ought to too.

Edited by Brittany Okay. King

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This text gives normal data and doesn’t represent authorized, tax, or enterprise recommendation. Corporations ought to seek the advice of with applicable professionals concerning particular conditions.