Google parent reports 15% growth in Q3, revenues reach $88B
Alphabet, the parent company of Google, has posted its third straight quarter of better-than-expected earnings. The tech giant's performance exceeded analyst expectations for both digital advertising and Google Cloud demand. Following the announcement on Tuesday, Alphabet's shares surged in after-hours trading. CEO Sundar Pichai credited the company's focus on innovation and long-term investment in artificial intelligence (AI) for the success.
Alphabet's revenue and earnings per share outperform predictions
Analysts had projected a 12% year-on-year revenue increase to $86.23 billion, and earnings per share of $1.85 for Alphabet. However, the company reported a 15% overall growth with revenues reaching $88.27 billion for the quarter, and earnings per share at $2.12. Advertising revenue saw a 10% rise, while cloud services revenue experienced a significant 35% boost. Pichai highlighted YouTube's growth in both advertising and subscriptions as another area that exceeded expectations.
AI products boost stock price amid increased spending
The launch of new AI products in recent years has boosted Google's stock price, which has jumped 20% in 2024 and over 150% in the last five years. Although seen as lagging behind OpenAI's state-of-the-art offerings, Pichai compared Google to a neural network "forming new synapses" to drive innovation. This growth has resulted in a spending spree with Google's capital expenditures rising 62% year-over-year to $13 billion.
Alphabet's legal challenges
Despite its financial success, Alphabet has been marred by legal challenges in 2024. The company recently lost an antitrust case against the US government, with proposals to break up the Android maker being considered after it was declared an illegal monopoly. Responding to the issues, Pichai said, "Some of the early proposals from the DoJ have been far reaching, and I think they could have unintended consequences with the dynamic tech sector and American leadership there."
Other Bets division reports revenue increase
Alphabet's Other Bets division, which includes businesses like Waymo and Verily, reported a revenue of $388 million. This was an increase from $297 million in the same quarter last year. Though these divisions still remain unprofitable and lost $1.1 billion in the quarter, Alphabet is working to minimize these losses. Ruth Porat, Alphabet's former CFO, who recently took a new role, will likely focus on the company's Other Bets portfolio.
