Alphabet reports a strong revenue surge driven by Google Cloud.
- The tech giant’s total revenue reached $88.3bn, a 15% increase.
- Advertising revenue rose modestly by 10.4% year-on-year.
- Capital expenditures soared due to investments in AI technology.
- Alphabet’s net income saw a significant rise, boosting investor confidence.
In the third quarter, Alphabet, the parent company of Google, experienced a substantial increase in revenue, largely propelled by the impressive performance of its Google Cloud division. The company’s total revenue reached $88.3 billion (£67.8 billion), marking a robust 15% growth from the same quarter the previous year.
Despite the overall revenue boost, Alphabet’s advertising sector showed a relatively modest increase. Year-on-year, ad revenue rose by 10.4%, with search advertising and YouTube earnings climbing by 12.2%, contributing to a total of $49.9 billion (£38.3 billion) from ad revenues. YouTube alone accounted for $8.9 billion (£6.8 billion) of this figure.
Matt Britzman, a senior equity analyst at Hargreaves Lansdown, highlighted the uncertainties facing Google’s search functionality in the evolving AI landscape. He noted the quarter’s importance as it was the first full period with Google’s AI innovations active in the US.
Ben Barringer, a tech analyst at Quilter Cheviot, commented on Alphabet’s ongoing innovation amid a thriving digital advertising market, despite existing challenges. The company faces increasing financial demands due to a 62% surge in capital expenditures, reaching $13.1 billion (£10.1 billion), driven by AI technology investments.
Alphabet’s Chief Financial Officer, Anat Ashkenazi, indicated plans for further substantial hikes in capital expenditure in 2025, aiming to balance significant AI investments against necessary cost management. Ben Barringer remarked on the company’s strategic focus on aligning AI development with cost discipline to fund ongoing investments.
Net income for Alphabet surged to $26.3 billion (£20.2 billion), representing a 33.6% increase from the previous year. The positive financial results led to a 5% rise in Alphabet’s share value during after-hours trading. Barringer praised the strong growth in cloud services, noting that it exceeded expectations and underscored the competitive positioning of major cloud providers amid the AI revolution.
Alphabet’s financial resilience is evident through its strategic expansion in cloud services and AI investment, driving significant revenue growth.
