Google beats third-quarter earnings expectations on AI momentum
Alphabet, the parent company of Google (GOOGL), exceeded Wall Street's expectations by reporting revenues of $88.3 billion for the third quarter. The consolidated revenues for Alphabet grew by 15% year over year, showcasing strong momentum across the business. The tech giant saw a 34% increase in net income and a 37% rise in earnings per share (EPS) to $2.12. Following this positive performance, Google's shares rose by 1.66% at the market close on Tuesday and by 2.25% during after-hours trading, with the company's stock climbing 22.6% year-to-date.
Positive Momentum and Growth
"The momentum across the company is extraordinary," stated Google CEO Sundar Pichai. He highlighted the company's commitment to innovation, long-term focus, and investment in artificial intelligence (AI) as key drivers of success. Analyst estimates compiled by FactSet (FDS) had predicted revenues of $86.4 billion and an EPS of $1.84 for the third quarter.
Outstanding Performance in Cloud Division
Alphabet's Cloud division witnessed a significant 35% revenue growth to reach $11.4 billion. This growth was attributed to accelerated adoption of Google Cloud Platform, especially across AI infrastructure, Generative AI Solutions, and core GCP products.
Innovation and AI Driving Success
In mid-October, analysts from Bank of America Global Research (BAC) noted the strength of Google's search capabilities in the third quarter, indicating that AI was enhancing monetization. Pichai emphasized the impact of AI features in expanding search capabilities and driving product adoption in the Cloud division.
Moreover, Google announced that total ads and subscription revenues for YouTube surpassed $50 billion over the past four quarters, a significant milestone for the platform.
Competition and Future Developments
Amidst reports of Meta (META) developing its own search engine to reduce reliance on Google and Microsoft's Bing, the competition in the AI space continues to intensify. Analysts highlighted potential challenges for Meta's search engine but acknowledged the shifting landscape of internet traffic and search preferences.
Challenges and Legal Issues
Despite its success, Google faced legal challenges, including a recent antitrust ruling and the possibility of a business breakup. The company was also entangled in an antitrust lawsuit related to its online advertising technology, signaling ongoing regulatory scrutiny.
For more tech news, follow Facebook, Twitter, and Instagram.
