Google boosts AI spending to $85B as user adoption of Gemini app soars

Google’s CEO Sundar Pichai declared that “AI is positively impacting every part of the business” as the company reported strong Q2 2025 earnings with $96.4 billion in revenue, up 14% year-over-year. The tech giant is doubling down on its AI strategy by increasing planned capital expenditures to $85 billion—a $10 billion jump that signals Google’s determination to keep pace with competitors like OpenAI and Meta in the AI infrastructure race.

What you should know: Google’s AI features are gaining massive user adoption across its platform ecosystem.

• AI Overviews now reaches more than 2 billion monthly users across “more than 200 countries and territories and 40 languages.”
• AI Mode has surpassed 100 million monthly active users in the US and India.
• The Gemini app has grown to 450 million monthly active users, “with daily requests growing over 50 percent from Q1.”

The big picture: Google’s aggressive AI push is reshaping how users interact with its core search product, though not without controversy.

• “We are also seeing that our AI features cause users to search more as they learn that Search can meet more of their needs,” Pichai noted, adding this trend is “especially true for younger users.”
• However, recent Pew research suggests AI Overviews successfully provide answers but reduce clicks to the original websites that supply the information.
• News publishers have criticized AI Mode for Search as “theft” of their content.

Key financial details: The earnings reflect Google’s continued dominance in search while heavy AI investments signal future priorities.

• Google Search segment revenue reached $54.1 billion for the quarter.
• The $85 billion capital expenditure plan represents a significant increase aimed at data center buildouts.
• This spending level positions Google to compete with massive infrastructure investments from AI rivals.

Recent developments: Google’s Q2 period was packed with AI-focused announcements and product launches.

• The annual I/O developer conference featured AI Mode rollout, upgraded video and image generation models, Gemini AI in Chrome, and enhanced Gmail smart replies.
• An Android-focused event revealed the new design language for Android 16.
• The company also updated its “G” logo for the first time in nearly a decade.

Regulatory challenges: Google faces potential breakup as antitrust remedies loom over the company.

• A judge ruled last August that Google “is a monopolist” in the Department of Justice’s lawsuit.
• The remedy phase took place during Q2, with potential outcomes including forced divestiture of Chrome.
• Multiple companies have reportedly expressed interest in acquiring Chrome if a breakup occurs.