Alphabet’s $85 Billion AI Bet Sends a Clear Signal to Big Tech

Alphabet posts record Q2 sales of $96.4 billion, up 14% year over year, and raises its 2025 capital-spending plan by 13% to about $85 billion. The stock added more than 1% in after-hours trading.

Cloud revenue surged 32% to $13.6 billion, outpacing the 10.4% rise in ad sales and 11.7% growth in search. Executives highlighted AI-driven demand and pointed to new products like the “AI Mode” search overhaul.

The spending spike shows Google straddling both sides of the AI race—as a supplier powering others’ models and a search incumbent defending its core business from ChatGPT-style rivals. Analysts said management’s assurance that AI hasn’t cut into search volumes calmed shareholder doubts raised by the ongoing antitrust case.

YouTube is rolling out an image-to-video generator and a suite of AI effects directly inside Shorts. Creators can now turn a single photo into a six-second clip or morph doodles and selfies into stylized videos without leaving the app.

The features launch this week in the United States, Canada, Australia, and New Zealand, run on Google’s Veo 2 model, and carry SynthID watermarks. They sit inside a new AI Playground hub that centralizes generative tools and example prompts, with wider regional access slated for later in the year.

The release mirrors similar image-animation options in Google Gemini and Meta’s Edits app, putting Shorts on par with its closest rivals. It arrives as the format tops 200 billion daily views, instantly exposing a massive audience to embedded generative video.

Google is rolling out two experimental AI features in Google Photos that turn single images into six-second videos and transform pictures into styles like anime, comics, and 3D sketches. The tools sit in a new “Create” tab and begin U.S. deployment on Android and iOS today.

The photo-to-video option uses Google’s Veo 2 model and is live now, while the Imagen-powered Remix feature follows in the coming weeks. Outputs carry invisible SynthID watermarks and, for videos, an additional visible marker to flag AI generation.

By inserting generative AI into a service with over 1.5 billion users, Google makes advanced media creation a mainstream habit overnight. Each result requests a thumbs-up or thumbs-down, giving Google a continuous feedback loop to hone its models at massive scale.

AI knowledge scores have dropped since September and the majority of the workforce are novice-level users, but 54% score themselves as AI proficient. Only 10% are.

In Section’s new AI Proficiency Report, data reveals why employees aren’t getting better at using AI, even while company investments go up, and how their employers might be contributing.

Johns Hopkins researchers used a new AI system called SRT-H to steer a DaVinci surgical robot through an entire gallbladder removal without human control. The feat marks the first fully autonomous procedure performed on the widely deployed platform.

SRT-H relies on two transformer models—one plans each surgical step, the other turns those plans into precise arm movements. The AI learned directly from surgeon demonstrations, moving beyond the rigid, pre-programmed motions of earlier systems like STAR.

The project used standard DaVinci hardware, which already numbers over 10,000 units in hospitals worldwide. That installed base gives the breakthrough immediate relevance to existing surgical infrastructure.

AI-powered “vibe coding” platforms like Cursor, Replit, and Lovable let writer Katie Parrot build a minimum viable product in two hours despite having zero programming experience. The tools create functional apps from plain-language prompts, erasing traditional skill barriers.

Using Lovable, she generated a polished personal website from a single request and then layered on a contact form, automated emails, and other features with additional tools. The project pulled her into APIs and edge functions she had previously avoided.

The experience flipped her long-held resistance to coding into an eagerness to learn it. She notes similar excitement across social feeds, calling it a broader “vibe shift” toward non-engineers embracing software creation.