In a historic achievement, Alphabet Inc., the parent company of Google, has crossed the remarkable milestone of $100 billion in quarterly revenue. This unprecedented accomplishment, announced in the third-quarter results, not only exceeded Wall Street expectations but also resulted in a 5% boost in Alphabet’s stock during after-hours trading.
Record Revenue and Strong Profits
Alphabet reported a staggering $102.35 billion in revenue, surpassing analyst predictions of $99.89 billion. Adjusted earnings per share also outperformed forecasts, reaching $3.10, compared to the anticipated $2.33.
Key Performance Highlights:
– YouTube Advertising: $10.26 billion (vs. $10.01 billion expected)
– Google Cloud Revenue: $15.15 billion (vs. $14.74 billion expected)
– Traffic Acquisition Costs: $14.87 billion (in line with estimates)
AI Drives Cloud Business Momentum
Google Cloud has emerged as one of Alphabet’s fastest-growing segments, propelled by soaring demand for artificial intelligence (AI) services. The cloud division reported an astonishing 35% year-over-year revenue growth, finishing the quarter with a substantial $155 billion backlog of customer commitments.
CEO Sundar Pichai attributes this momentum to the high demand for enterprise AI infrastructure and Google’s innovative Gemini AI platform. “We have signed more deals over $1 billion through Q3 this year than in the previous two years combined,” Pichai stated, highlighting a significant $10 billion, six-year cloud contract with Meta.
Notably, over 70% of Google Cloud customers are now leveraging the company’s AI tools, showcasing a successful upsell strategy.
Rapid Growth in AI Usage
Google’s flagship AI product, Gemini, has seen a remarkable surge in popularity, boasting over 650 million monthly active users, a rise from 450 million the previous quarter. In comparison, OpenAI’s CEO Sam Altman recently reported that ChatGPT attracts around 800 million weekly users.
Significant Infrastructure Investment on the Horizon
With AI demand skyrocketing, Alphabet is substantially increasing its capital expenditures on data centers, specialized chips, and infrastructure.
– 2025 Capital Expenditures: Expected to reach $91B–$93B
– 2026 CapEx: Anticipated to see a significant increase, as stated by CFO Anat Ashkenazi
Previously, Alphabet had already raised its capital expenditures forecast from $75B to $85B, aiming to support its AI backlog and ensure the future growth of Google Cloud.
Core Advertising Business Remains Robust
Alphabet’s core advertising continues to be a primary revenue generator:
– Search Revenue: $56.56 billion (up 15% year-over-year)
– Total Ad Revenue: $74.18 billion (vs. $65.85 billion last year)
Despite facing a $3.45 billion antitrust fine in Europe, Alphabet reported a net income of $34.97 billion, a significant increase from $26.3 billion in the previous year.
Challenges for Other Bets
Alphabet’s experimental divisions, such as Verily and Waymo, are still operating at a loss:
– Revenue: $344 million, down from $388 million last year
– Loss: $1.42 billion, which is larger than last year’s $1.12 billion
Conclusion
Driven by strong AI momentum, a surge in cloud deal flow, and record revenue, Alphabet shares have increased by 45% year-to-date.
In summary, Alphabet’s significant quarterly performance underscores the company’s strategic emphasis on AI and cloud computing while maintaining its dominance in advertising. As it continues to invest in infrastructure and talent, the future looks bright for this tech giant.
