Alphabet shares are rising on earnings gains boosted by cloud sales

Google parent alphabet reported third-quarter earnings that beat top and bottom lines, with strong revenue growth from the corporate's cloud unit.

The company's shares rose as much as 6% in after-hours trading.

Here are the outcomes:

• Earnings per share: $2.12 versus $1.85 expected from LSEG
• Revenue: $88.27 billion vs. LSEG expects $86.30 billion

Here are other numbers Wall Street has been watching:

• YouTube promoting revenue: $8.92 billion versus $8.89 billion, based on StreetAccount
• Google Cloud revenue: $11.35 billion vs. According to StreetAccount, $10.88 billion
• Traffic Acquisition Cost (TAC): $13.72 billion versus $13.53 billion, based on StreetAccount

Alphabet's revenue rose 15% year-over-year, which was stronger than the year-ago quarter.

The company reported a surprising $11.35 billion in cloud revenue, up nearly 35% from $8.41 billion last yr. The company attributed its strong cloud results to its artificial intelligence offerings, which include subscriptions for enterprise customers.

Alphabet CEO Sundar Pichai opened his conference call with investors by saying that the corporate's “full stack” of AI products at the moment are working at scale and getting used by Google's billions of users, “creating a virtuous circle.”

The search company's strong quarter kicks off every week of gains for mega-cap tech corporations. Meta And Microsoft report on Wednesday, followed by Apple And Amazon on Thursday.

Alphabet's net income rose to $26.3 billion, or $2.12 per share, compared with $19.7 billion, or $1.55 per share, within the year-ago quarter.

Google's search business generated revenue of $49.4 billion. That's 12.3% greater than a yr ago, and the search business stays the biggest contributor to the corporate's revenue growth, Alphabet Chief Financial Officer Anat Ashkenazi said within the conference call.

Use AI to cut back costs even further

Alphabet plans to construct on existing cost-cutting efforts around using AI to streamline workflows and manage the corporate's headcount and physical footprint, Ashkenazi said.

“I plan to build on those efforts but also look at where we may be able to accelerate the work and where we may need to pivot to free up capital for more attractive opportunities,” said Ashkenazi, who retired in June after 23 years at a drugmaker Company got here Eli Lilly.

Alphabet reported promoting revenue of $65.85 billion. That's up from $59.65 billion a yr ago, showing that Google's promoting business continues to grow, albeit more slowly than within the second quarter.

YouTube promoting revenue beat analysts' expectations and showed higher growth than last quarter. The Google-owned company is facing increasing pressure from other promoting options resembling Netflix, TikTok and Amazon.

AI improves YouTube recommendations, said Chief Business Officer Philipp Schindler in an interview with investors. The company's Gemini AI language model has given YouTube the power to “recommend more relevant, fresh and personalized content to the viewer.”

Google Workspace, the corporate's collection of cloud computing and productivity suites, posted strong growth within the third quarter, Ashkenazi said. Google Cloud Platform, the corporate's data management and AI suite, posted growth through the quarter that exceeded the expansion of its cloud unit, Ashkenazi added.

Other Bets, which incorporates life sciences unit Verily and self-driving automotive unit Waymo, reported third-quarter revenue of $388 million. That's up from $297 million a yr ago.

Last week, Waymo closed a $5.6 billion funding round to expand its robotaxi service in Los Angeles, San Francisco and Phoenix to other cities.

Google Lens, the corporate's image recognition product that uses mobile cameras and photos, is now used for greater than 20 billion visual searches monthly, Pichai said. It is one in all the fastest-growing search products and is widely used for shopping, he added.

Alphabet's third quarter was marked by external and internal upheaval, including at the best levels of leadership and in its most vital business unit.

Earlier this month, the corporate replaced Prabhakar Raghavan, the corporate's search and ads chief since 2018, with Nick Fox, a longtime executive known for his role in Google's Assistant division. Additionally, the team working on the Gemini app, which incorporates the corporate's direct-to-consumer artificial intelligence products, will join Google DeepMind, led by Demis Hassabis.

The company said Tuesday that it’s evaluating how this restructuring will impact its segment's operating results.