TLDR:
- Alphabet’s Q3 earnings significantly exceeded expectations with EPS of $2.12 vs $1.85 expected
- Cloud revenue surged 35% to $11.35 billion, driven by AI offerings
- Overall revenue grew 15% year-over-year to $88.27 billion
- Advertising revenue reached $65.85 billion, up from $59.65 billion last year
- Stock jumped nearly 6% in premarket trading following the results
Alphabet, Google’s parent company, delivered strong financial results for the third quarter of 2024, exceeding Wall Street expectations across key metrics. The company reported earnings per share of $2.12 on revenue of $88.27 billion for the quarter ending September 30.
The tech giant’s cloud division emerged as a standout performer, generating revenue of $11.35 billion, marking a 35% increase from the previous year. This growth was largely attributed to increased adoption of the company’s artificial intelligence offerings among enterprise customers.
Google’s core advertising business maintained its momentum, with revenue climbing to $65.85 billion from $59.65 billion in the same period last year. Search revenue, which remains the company’s largest revenue contributor, grew by 12.3% to reach $49.4 billion.
YouTube advertising showed resilience despite growing competition from platforms like Netflix, TikTok, and Amazon. The video platform generated ad revenue of $8.92 billion, slightly exceeding analyst expectations.
CEO Sundar Pichai emphasized the company’s AI portfolio during the earnings call, noting that Google’s “full stack” of AI products is now operating at scale. The company’s AI Overview feature has reached a milestone of 1 billion monthly users, demonstrating growing user engagement with AI-powered search capabilities.
The financial results prompted a strong market response, with Alphabet’s stock rising up to 6% in after-hours trading. Net income increased to $26.3 billion, compared to $19.7 billion in the year-ago quarter.
Google’s cloud division continued to gain market share in a competitive landscape that includes Microsoft and Amazon. The company reported that Google Cloud Platform’s growth outpaced the overall cloud unit’s growth during the quarter.
Cost management remained a priority, with new CFO Anat Ashkenazi announcing plans to leverage AI for workflow streamlining and headcount management. The company anticipates increased AI and data infrastructure spending in 2025, with approximately $13 billion allocated for capital expenditures in the current quarter.
Other segments of the business showed promising growth. Google Lens, the company’s image recognition product, now processes over 20 billion visual searches monthly. The Other Bets division, which includes Waymo and Verily, reported revenue of $388 million, up from $297 million a year ago.
Recent organizational changes included the appointment of Nick Fox to lead the search and ads division, replacing Prabhakar Raghavan. Additionally, the Gemini app team has been integrated into Google DeepMind under Demis Hassabis’s leadership.
The company faces evolving competitive dynamics in the search market, with Meta reportedly developing its own search engine for its AI chatbot. However, Google maintains that its AI-enhanced search features are driving increased user engagement and more complex queries.
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