by Shares of Google parent Alphabet (GOOG, GOOGL) jumped 6% after hours Tuesday as the company reported third-quarter results that beat analysts’ estimates in terms of numbers. business and results, helped by the strong growth of its cloud business.
The search giant reported earnings per share of $2.12 on revenue of $88.27 billion for the quarter ended September 30. This represents an increase in profits and sales compared to the same period last year of 37% and 15%, respectively.
Analysts had expected earnings per share of $1.83 on revenue of $86.44 billion, according to data compiled by Bloomberg.
Advertising revenue topped $65.85 billion, compared to $65.5 billion expected by analysts, up from $59.65 billion last year.
Google CEO Sundar Pichai highlighted the cloud unit’s growth during a conference call Tuesday, noting that the company’s AI portfolio is attracting new customers and leading to larger deals. Cloud revenue was $11.4 billion, up 35% from the same period last year, beating expectations.
“This business is seeing real momentum, and the overall opportunities are increasing as customers embrace generation. AI,” he said.
The surge in cloud revenue comes as rivals Microsoft (MSFT) and Amazon (AMZN) are also expected to expand their cloud businesses and increase investments in AI infrastructure. Google plans to spend about $13 billion in capital expenditures for the current quarter, Chief Financial Officer Anat Ashkenazi said on the call. And the company expects spending on AI and data infrastructure to further increase in 2025.
Google is also facing competition on its own turf with the introduction of increasingly sophisticated AI-based chatbots. On Monday, Information reported that Meta (META) was developing its own search engine to drive its Meta AI chatbot, providing users with conversational responses to their questions and prompts.
How the next generation of answer engines will compete with Google’s traditional, AI-powered search remains a key question for the company.
Pichai touted the expansion of AI search tools as an improvement in user experience. AI Overviews, Google’s search feature that offers concise answers to user queries, now reaches 1 billion users on a monthly basis, the company announced Monday.
“People are asking longer, more complex questions and exploring a wider range of websites,” Pichai said. “What’s particularly exciting is that this growth increases over time, as people learn that Google can answer more of their questions.”
Like existing search results, users see ads that Google places alongside the AI previews.
