Google’s parent company, Alphabet, reported robust third-quarter results on Tuesday, showing a 15% year-on-year revenue increase to $88.3 billion. This growth was fueled by the core advertising sector of Google and an impressive rise in cloud services.
Net income surged 34% to reach $26.3 billion, while earnings per share climbed by 37% to $2.12. Operating margins also rose by 4.5 points to 32%, indicating streamlined cost efficiency.
CEO Sundar Pichai credited Alphabet’s commitment to artificial intelligence (AI) as a driving force, saying, “Our long-term focus and investment in AI are delivering value to consumers and partners.” Alphabet’s Google Search now offers AI Overviews to a billion users, responding to increasing competition from generative AI tools like ChatGPT. The company also recently reorganised its search business, transferring its Gemini chatbot team to Google DeepMind.
Google Cloud was a highlight, with a 35% revenue boost to $11.4 billion, driven by demand for AI capabilities. This business, though still behind Amazon and Microsoft, supports companies with data storage and AI infrastructure.
Alphabet’s share price rose by 5% in after-hours trading following the report. Despite strong earnings, Alphabet faces long-term legal challenges. It’s embroiled in antitrust cases over its search engine monopoly and dominance in online ads, with one case potentially forcing Android to allow rival app stores. These legal battles could affect the company’s strategy and dependence on search revenue in the years ahead.