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Google (GOOGL+1.67%) parent Alphabet surpassed Wall Street’s expectations, reporting revenues of $88.3 billion for the third quarter.
Consolidated Alphabet revenues grew 15% year over year, the company said, “reflecting strong momentum across the business.” The tech giant reported net income increased 34%, and earnings per share, or EPS, increased 37% to $2.12. Google’s shares were up 1.66% at the market close on Tuesday, and were up 2.25% during after hours trading. The company’s stock has climbed 22.6% so far this year.
“The momentum across the company is extraordinary,” Google chief executive Sundar Pichai said in a statement. “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.”
Google was expected to report revenues of $86.4 billion and EPS of $1.84 for the third quarter, according to analyst estimates compiled by FactSet (FDS+0.19%).
The company’s Cloud division revenues grew 35% to $11.4 billion due to “accelerated growth in Google Cloud Platform across AI infrastructure, Generative AI Solutions, and core GCP products,” it said.
In mid-October, analysts at Bank of America Global Research (BAC-0.21%) said they expected to see search strength in the third quarter “suggesting AI is driving higher monetization,” as well as “positive commentary” from Google on how its AI Overviews feature is “driving higher usage, or new advertising opportunities.”
“In Search, our new AI features are expanding what people can search for and how they search for it,” Pichai said. “In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals.”
Total ads and subscription revenues for YouTube “surpassed $50 billion over the past four quarters for the first time,” he added.
Meanwhile, Meta (META+2.58%) is reportedly developing a search engine to lessen its reliance on Google Search and rival Microsoft’s (MSFT+1.26%) Bing to power responses for its Meta AI chatbot. Meta currently uses the search engines to provide answers to queries, The Information reported, citing an unnamed person familiar with the matter. Another person told the publication that building its own search engine could help Meta if Google or Microsoft end their partnerships.
But Meta’s reported search engine would “be at a data and web scraping disadvantage” compared to Google due to a “limited number of Meta AI users,” Bank of America Global Research analysts said in a note on Tuesday.
Still, “[g]iven the significant amount of time spent on Meta’s apps, if users increasingly engage with Meta AI for information, there is a possibility that a portion of internet traffic could shift away from Google Search,” the analysts said. They added that “Google could (and should) highlight new AI Overview capabilities and any related search query traction to improve increasingly cautious sentiment on search share risk.”
In August, a federal judge ruled that Google had monopolized the online search engine market, concluding the Department of Justice’s anti-trust case against the tech giant. The Justice Department was then reportedly considering ways to break up Google’s business, such as forcing the company to sell off some of its parts. A month later, Google was facing another anti-trust lawsuit over its online advertising technology.
