While many companies are dealing with the economic impact of the Trump administration’s global tariffs, Alphabet (GOOGL), the parent company of Google (GOOGL), has so far avoided significant impacts due to its business model that does not rely on physical goods. The technology giant exceeded expectations in the first quarter of 2025, reporting revenues to $90.2 billion year-on-year and profits rose 46% to $34.5 billion.
Still, letters are not immune. “We are obviously not immune to the macro environment,” Google’s chief business officer Philipp Schindler said on the company’s revenue call yesterday (April 24), adding that it was “in fact too early” to how tariffs will affect advertising spending, but acknowledged that the recent elimination of key trade exemptions could pose problems.
This is the “minimum” exemption, which allows goods worth less than $800 to enter the United States with tax exemption. However, under the executive order signed in April, the items will be subject to a 30% tax or a flat fee of $25 starting from May 2. The move is expected to reduce spending on Chinese e-commerce such as Chinese e-commerce giants Temu and Shein.
“The changes in the De Minimis exemption will obviously cause a smaller headwind for our advertising business in 2025, mainly from APAC’s retailers,” Schindler said.
Temu is reportedly already expanding its advertising spending among U.S. retailers account for about 21% of Google’s advertising revenue, according to Oppenheimer & Co.
Currently, Google’s advertising business is still strong, bringing in $66.8 billion in the first quarter, an increase of 8.5% from the same period last year.
Other departments of Alphabet have also released revenue. Revenues for Google services, including Search, Chrome and YouTube, rose 10% by $77.2 billion. Google Cloud sales rose 28% to $12.2 billion. Other betting divisions, including Waymo and Wing, brought in $450 million, down from $495 million a year ago. Letters shares rose more than 1% today.
Google insists on AI spending courses
Despite economic uncertainty, Google is still investing in AI in advance. Capital expenditure reached $17.2 billion in the first quarter, up 43% year-on-year, and the company reiterated plans for the year totaling approximately $75 billion.
CEO Sundar Pichai said AI overview generates search summary and now serves 1.5 billion users per month. “We tend to be here here,” he told analysts, adding that the feature is expanding to new countries, users and queries. Last month, Google launched an extended version of AI overview, called AI Mode, a more advanced version designed to complex queries.
Internally, the company is also expanding AI usage. Pichai noted in October that a quarter of new regulations include recommendations for AI generation. He said the number is “over 30% now.”
