Alphabet Inc., the parent company of Google, saw its stock rise nearly 6% in premarket trading following third-quarter earnings that exceeded analyst expectations, driven by significant growth in its cloud and AI services. For the quarter ending September 30, Alphabet posted revenue of $88.3 billion, a 15% increase year-over-year, along with earnings per share of $2.12. Both metrics outperformed Wall Street forecasts, which predicted revenue of $86.4 billion and earnings of $1.83 per share.
Alphabet’s operating income grew by 34%, with operating margins expanding to 32%, up 4.5 percentage points from last year. The company’s cloud division emerged as a key growth driver, with revenue from Google Cloud reaching $11.4 billion, up 35% from last year. CEO Sundar Pichai attributed this growth to the accelerated adoption of Google’s AI offerings within its cloud services, which have attracted new customers and led to larger contracts.
The company’s core advertising segment also delivered strong results, with revenue from Google Search and YouTube ads totaling $65.85 billion. Pichai highlighted the role of AI-enhanced search features, such as the “AI Overviews,” which now reach over a billion users per month, in maintaining engagement and ad performance as users increasingly turn to Google for more complex queries.
Alphabet also disclosed plans to increase investment in AI and data infrastructure, with an anticipated $13 billion in capital expenditures for the current quarter. This investment aims to support ongoing demand for its cloud and AI tools, which position the company competitively against major cloud players like Microsoft and Amazon.
This robust quarterly performance from Alphabet marks the start of tech earnings season, with major players like Meta, Microsoft, Amazon, and Apple set to release their results in the coming days. The focus remains on how each company’s AI investments shape their future revenue and market position.
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