The AI Plot Twist No One Saw Coming
Yes, the Simpsons were right.
Everyone’s talking about OpenAI. It dominates the media, shapes the public narrative, and drives the influencer economy. But if you zoom out from the hype and dig into the numbers, a different story emerges — one where Alphabet, Google’s parent company, quietly pulls ahead on infrastructure, economics, and product integration. The reality is becoming harder to ignore:
OpenAI may have captured the spotlight, but Google captured the market.
Let me explain.
CapEx: The Clearest Signal of Intent
On July 23, Alphabet reported its Q2 2025 earnings — and they were a clinic in scale and performance. Revenue hit $96.4 billion, up 14% year over year. Net income reached $28.2 billion, and earnings per share came in at $2.31, a 22% increase. These numbers are proof that Alphabet’s AI investments are already paying off in real-world monetization.
Alphabet’s capital expenditure strategy underscores just how seriously it’s leaning into AI — not as a product experiment, but as a generational infrastructure shift. Wall Street originally expected Alphabet to spend around $58.84 billion on CapEx in 2025. But in February, the company surprised everyone by announcing it would invest $75 billion instead.
Then, on Wednesday, it raised the bar again: CapEx is now set at $85 billion for the year, citing “strong and growing demand for our Cloud products and services.” The company expects to further increase capital expenditures in 2026, Alphabet finance chief Anat Ashkenazi said on an earnings call.
This is a strategic signal: Google is building for dominance — not just in AI capabilities, but in the infrastructure layer that will power the next decade of digital business.
🔍 Search Isn’t Dead. It’s Evolving.
Despite the noise, Google Search isn’t dying — it’s transforming. While its global market share may have dipped just below 90% for the first time in a decade, it’s still the central engine of Alphabet’s business. And now, with AI Overviews and AI Mode enhancing the experience, search is becoming more useful, more engaging, and more monetizable than ever. What looks like disruption from the outside is actually evolution from within.
- $54.2B in Search revenue
- Still accounts for 2/3 of total revenues
- Advertisers show no signs of leaving — especially as AI-enhanced results boost relevance and ROI
- AI Overviews and AI Mode are driving higher engagement and monetization potential
Even as Google’s global market share dips slightly below 90%, Search remains THE engine.
☁️ Google Cloud: Quietly Growing
In Cloud, Google’s growth is accelerating. The company reported $13.6 billion in cloud revenue, up 32% year-over-year. This surge includes major enterprise clients (including OpenAI itself), and brings Google Cloud’s annual run rate past the $50 billion mark.
- $13.6B in Cloud revenue this quarter (+32% YoY)
- Annual run-rate: >$50B
- Includes revenue from OpenAI — a paying GCP customer
Alphabet is gaining ground on AWS and Azure while powering its own massive AI stack internally. That’s vertical integration and horizontal growth.
YouTube & Ads: Still Climbing
YouTube advertising also remains strong, hitting nearly $9.8 billion, up 13% year over year, while subscription services, platforms, and devices together brought in $11.2 billion, showing Alphabet’s growing diversification. Performance advertising tied to e-commerce continues to drive revenue growth.
- YouTube ads: $9.8B (+13% YoY)
- Performance marketing remains strong (especially e-commerce)
- Subscriptions + platforms + devices revenue: $11.2B (+20% YoY)
- Total Google Services revenue: $82.5B
Brand advertisers may face pressure, but YouTube’s hybrid model (ads + subscriptions) keeps the growth steady — especially on mobile and creator content.
Free Users Aren’t Free
And what about product usage? Despite the myth that ChatGPT is replacing search, Google still processes ~16 billion queries per day, compared to ChatGPT’s ~1 billion. That’s a 16x usage gap — and more importantly, Google makes money on those 16 billion queries. It monetizes them with search ads, performance marketing, and deeply integrated advertiser tools that have matured over two decades.
Google: ~16 billion queries per day. ChatGPT’s ~1 billion.
ChatGPT, by contrast, loses money on every query — even the free ones. Some may argue that OpenAI’s 350 million free users are a good sign, drawing parallels to the early days of Facebook or Google. But that analogy breaks down under scrutiny. Both Meta and Google built products that naturally generated data for high-margin ad businesses. Every user interaction — clicks, searches, video watches — became an input for targeting, which meant free users were extremely valuable from day one.
ChatGPT loses money on every query
Read OpenAI is losing money on its pricey ChatGPT Pro plan, CEO Sam Altman says.
OpenAI doesn’t have that flywheel. A “free” ChatGPT user doesn’t give OpenAI the same monetizable signal. There’s no ad product, no persistent user behavior to track, and no scaled way to extract value — beyond trying to upsell to ChatGPT Plus. Worse, each free user actually becomes less valuable over time, consuming GPU cycles without returning margin. The result is a negative economic loop: the more users OpenAI adds, the more it loses.
That’s the inverse of what made Google and Meta so powerful.
Read OpenAI Is A Bad Business.
And while OpenAI burns money like the Joker, Google makes money at scale — leveraging infrastructure it owns, distributing Gemini across Gmail, Docs, Android, YouTube, and Search, all with near-zero marginal cost.
Gemini’s Engineering Edge
Behind the scenes, Gemini is out-engineering its competitors. It supports a 1 million-token context window — vastly larger than GPT-4o’s 128k. It’s natively multimodal from the ground up, handling image, audio, code, and video seamlessly. And it runs on Google’s custom TPU hardware, not rented GPUs — which makes inference faster and cheaper to scale. These technical foundations aren’t academic — they’re showing up in product adoption, user engagement, and financial performance.
Multimodal = It works with any data using the same model. TPU = Tensor Processing Unit. Think about GPU on steroids.
Still, OpenAI continues to win one thing
Still, OpenAI continues to win one thing: the story. It owns about 90% of the media share of voice in the GenAI space, capturing the imagination of the public, executives, and venture capitalists alike. That narrative dominance fuels valuation, FOMO-driven adoption, and consulting revenue. It’s a masterclass in perception — but perception isn’t product-market fit.
Sundar Pichai vs. Sam Altman: Capital Strategy vs. Narrative Control
Now, let’s compare their leaders based on how they talk.
Sundar Pichai, CEO, said: “We had a standout quarter, with robust growth across the company. We are leading at the frontier of AI and shipping at an incredible pace. AI is positively impacting every part of the business, driving strong momentum. Search delivered double-digit revenue growth, and our new features, like AI Overviews and AI Mode, are performing well. We continue to see strong performance in YouTube as well as subscriptions offerings. And Cloud had strong growth in revenues, backlog and profitability. Its annual revenue run-rate is now more than $50 billion. With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures in 2025 to approximately $85 billion and are excited by the opportunity ahead.”
Source: https://abc.xyz/assets/cc/27/3ada14014efbadd7a58472f1f3f4/2025q2-alphabet-earnings-release.pdf
In plain English: Sundar Pichai is saying, “AI is already working for us — across Search, YouTube, Cloud, and more. It’s making us money, fast. So we’re doubling down and investing even more because demand keeps growing.”
Sam Altman said: “Whether we burn $500 million, $5 billion, or $50 billion a year, I don’t care!”
This is not AI generated, watch the entire interview here. I’m not a broker working at Wall Street, but I think these are words no investor would ever want to hear.
Translation: OpenAI is chasing big, bold ideas — but profit isn’t the priority. Growth is.
⚖️ Google vs OpenAI: The Real Gap
💡 Final Thought
In this GenAI gold rush, attention has been mistaken for dominance.
But attention doesn’t scale. Infrastructure does.While OpenAI captures the imagination, Google captures the value — at 16 billion queries a day, across every screen, product, and platform it touches. It’s not just leading in AI. It’s weaving AI into the fabric of how the internet works — and monetizing it with ruthless efficiency.
We’re not watching a rivalry.
We’re watching two completely different games.OpenAI is still trying to figure out how to pay for the stadium.
Google is already selling tickets, concessions, and broadcast rights.The twist? The company everyone thought might get disrupted… became the disruptor.
And yes — The Simpsons were right.
Again.
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