Alphabet, the parent company of Google, reported stronger-than-expected earnings and revenue for the third quarter, driven by substantial growth in its cloud computing segment. Alphabet noted that its investments in artificial intelligence (AI) are beginning to yield results, leading to nearly a 6% rise in the company's shares in after-hours trading.
For the third quarter, Alphabet achieved a total revenue of $88.27 billion, marking a 15% increase from the previous year, compared to the analysts' forecast of $86.3 billion. The net profit soared to $26.3 billion, up 33.6% year-over-year, surpassing the anticipated $22.8 billion. Earnings per share stood at $2.12, representing a 36.8% increase, beating the expected $1.85.
The company's digital advertising sales rose by 10.4% to $65.85 billion, against the analysts' prediction of $65.5 billion. YouTube advertising revenue captured $8.92 billion, a growth of 12.2%, fueled in part by spending related to the U.S. elections. The search business reported revenues of $49.4 billion, a 12.2% rise, showing continued growth despite a slower pace compared to the previous quarter.
Google’s cloud division recorded revenue of $11.35 billion, an impressive 35% increase, exceeding the forecasted $10.88 billion. The company credits its strong cloud performance to AI-driven solutions, including subscription services for enterprise clients. Alphabet's "Other Bets" segment, which includes Verily and Waymo, saw revenues increase to $388 million, up from $297 million the prior year.
Waymo recently secured $5.6 billion in funding to expand its autonomous taxi services in several major cities. Alphabet CEO Sundar Pichai emphasized the company's AI advancements during an investor call, highlighting improvements in YouTube's recommendation capabilities and the wide-scale deployment of AI products used by billions of Google users globally.
Despite trailing behind Microsoft in the AI race, Alphabet is enhancing its AI capabilities, including the Gemini AI chatbot and AI search improvements. The company plans to continue investing heavily in AI, with capital expenditure expected to rise in 2025. Alphabet aims to leverage AI to streamline workflows and manage employee numbers effectively.
