Alphabet, Google’s parent company, outperformed Wall Street expectations in its third-quarter earnings report on Tuesday (Wednesday AEDT), setting a high bar in a busy week for big tech.
The search giant delivered earnings per share of US$2.12, well above the projected $1.84, while revenues were recorded at $88.27 billion versus $86.39 billion expected, with $65.9 billion coming from its core Google advertising business.
Google Services revenue rose 13% to $76.5 billion, spurred by growth across Google Search, subscriptions, YouTube ads, and devices.
Google Cloud revenue increased 35% to $11.4 billion, boosted by advancements in Google Cloud Platform (GCP) offerings, including AI infrastructure, generative AI solutions, and core GCP products.
Shares of Alphabet rose over 4.8% in after-hours trading following the announcement, having gained 1.7% during regular trading.
Alphabet’s third quarter brought several structural shifts, both internal and external, with Nick Fox replacing Prabhakar Raghavan as head of Google Search and ads.
Meanwhile, Google’s Gemini AI consumer product team joined Google DeepMind under Demis Hassabis, reflecting Alphabet’s push for a competitive edge in AI.
Externally, Alphabet faced mounting antitrust pressures. In August, a federal U.S. judge ruled that Google’s search monopoly was illegal, marking a significant antitrust decision against a tech firm.
Subsequently, in early October, the DOJ recommended a potential structural overhaul of Alphabet’s Chrome, Android, and Google Play businesses to limit exclusive agreements on search and search-related products. This may eventually affect Google’s default search deals with Apple and Samsung, which cost billions annually to maintain.
Alphabet's antitrust challenges continue as it faces a separate DOJ case involving its ad tech division, with closing arguments scheduled for November 25. In October, a U.S. judge also issued an injunction requiring Google to offer alternative app download sources on Android devices, though this has been temporarily paused.
In August, Alphabet launched updates to Android and new Pixel smartphones featuring Gemini AI integration. While hardware remains a minor revenue contributor, the Gemini AI assistant marks Alphabet’s push into AI-backed consumer experiences, which could drive future growth in its AI subscription services.
Sundar Pichai, CEO of Alphabet, said: “The momentum across the company is extraordinary. Our commitment to innovation, as well as our long-term focus and investment in AI, are paying off with consumers and partners benefiting from our AI tools.”
As of 7:30 am (AEDT), Wednesday, October 30, Alphabet Inc. stock (GOOGL) was trading at US$176.49, significant increase of 4% from the close of $169.68. The stock reached a day low of $167.09 and a day high of $170.38. Alphabet's market cap stands at $2.1 trillion.