Alphabet Inc., Google’s parent company, reported stronger-than-expected third-quarter sales, fueled by a surge in demand for cloud computing services. As companies race to adopt artificial intelligence (AI), Google Cloud has played a pivotal role in boosting Alphabet’s earnings. Revenue, excluding partner payouts, rose to $74.6 billion, surpassing analysts’ prediction of $72.9 billion. Net income was $2.12 per share, higher than the $1.84 analysts had estimated.
Google is increasingly relying on its cloud division as its primary search business matures. The company has been gaining ground on cloud giants like Amazon and Microsoft by attracting fast-growing AI startups and existing companies using its AI-powered cloud solutions. CEO Sundar Pichai noted that AI is driving deeper product adoption, new customer acquisition, and larger deals.
Cloud division revenue reached $11.4 billion, exceeding the projected $10.8 billion. Research analyst Ido Caspi of Global X ETFs stated that the rise in enterprise AI workloads would continue to support cloud revenue growth. Following the earnings report, Alphabet’s shares rose over 5%, with the stock gaining 21% so far this year.
In a call with investors, Pichai highlighted that Google had reduced the cost of providing AI-driven search results by over 90% in just 18 months, while doubling the size of its generative AI model, Gemini. The company is also investing in alternative energy sources, including nuclear power, to meet the growing demands of AI technologies.
Alphabet’s “Other Bets,” which includes ventures like Waymo (self-driving cars) and Verily (life sciences), generated $388 million in revenue, up from $297 million a year ago. However, this division remains unprofitable, reporting a $1.1 billion loss for the quarter. Ruth Porat, Alphabet’s former CFO and current president and chief investment officer, is now focusing on narrowing these losses.
Despite its successes, Google faces regulatory challenges. In August, a U.S. judge declared Google’s search business an illegal monopoly, and the company is under scrutiny for allegedly monopolizing digital advertising markets. Pichai warned that ongoing antitrust cases could have unintended consequences for U.S. tech leadership. Nonetheless, digital advertising analyst Evelyn Mitchell-Wolf emphasized that Google continues to perform well despite regulatory threats to its advertising business.
