Google’s parent company Alphabet’s (GOOG, GOOGL) stock prices rose after the company announced third-quarter results that exceeded analysts’ expectations for both sales and bottom line, supported by strong growth in its cloud business. Shares rose 6% in after-hours trading Tuesday.
The search giant reported earnings per share of $2.12 and revenue of $88.27 billion for the quarter ended Sept. 30. This represents a 37% increase in profits and a 15% increase in sales compared to the same period last year.
Analysts had expected earnings of $1.83 per share and revenue of $86.44 billion, according to data compiled by Bloomberg.
Advertising revenue exceeded $65.85 billion, compared to analysts’ expectations of $65.5 billion, and was up from $59.65 billion in the year-ago period.
Google CEO Sundar Pichai highlighted growth in the cloud division during an earnings call Tuesday, noting that the company’s AI portfolio is attracting new customers and leading to bigger deals. Cloud revenue rose 35% year over year to $11.4 billion, exceeding expectations.
“There’s real momentum in this business and the overall opportunity is increasing as customers embrace second-generation AI,” he said.
The jump in cloud revenue comes as rivals Microsoft (MSFT) and Amazon (AMZN) are also expected to grow their cloud businesses and step up investments in AI infrastructure. Google plans to spend about $13 billion in capital spending this quarter, CFO Anat Ashkenazi said on a conference call. And the company expects spending on AI and data infrastructure to increase further in 2025.
Google also faces competition on its home turf with the introduction of increasingly sophisticated AI-powered chatbots. On Monday, The Information reported that META is developing its own search engine to power its Meta AI chatbot, which provides conversational answers to users’ questions and prompts.
How the next generation answer engine will compete with Google’s traditional search and AI-powered search remains a key question for the company.
Pichai positioned the expansion of AI search tools as an improvement to the user experience. AI Overview, Google’s search feature that provides concise answers to user questions, now reaches 1 billion users on a monthly basis, the company announced Monday.
“People are asking longer, more complex questions and browsing a wider range of websites. What’s particularly interesting is that as people learn that Google can answer more questions, this increase is actually increasing over time,” Pichai said.
Similar to traditional search results, users will see ads placed by Google alongside the AI summary.
story continues
