Alphabet’s revenue increased by 15 percent during the latest quarter, topping $88.3 billion. Powered by advertising and cloud services, profits surged 34 percent to $26.3 billion, exceeding Wall Street expectations of $22.9 billion. The company experienced continued growth in the online marketplace with popular consumer services such as Google Search and YouTube while also expanding in B2B with cloud offerings. All this as the government explores dismantling its business while competitors such as TikTok and Amazon come after its market share. Advertising growth slowed in Q3, yet still notched a healthy year-over-year increase of 10.4 percent.

“The results showed that Alphabet’s popular online services, led by Google’s search engine and YouTube’s video platform, remained central pathways for marketers to get their ads in front of consumers,” writes The New York Times, noting that the company has also “pivoted to artificial intelligence, competing with Microsoft and OpenAI for chatbot users, developers and corporate customers.”

That has come at a cost, with investments in data centers and hardware in Q3 sucking up $13 billion, a 62 percent uptick from a year earlier. Alphabet and Google CEO Sundar Pichai told analysts on the earnings call that the company is “uniquely positioned to lead in the era of AI because of our differentiated full stack approach to AI innovation, and we’re now seeing this operate at scale.”

Ruth Porat, who held the CFO post at Alphabet for nine years, “took a giant pay package in 2015 to leave Wall Street for Silicon Valley,” according to CNBC.

Google’s cloud division, which has benefitted from explosive growth in AI, amassed $11.4 billion in Q3 revenue, up 35 percent from the previous year. Advertising, on the other hand, brought in $65.9 billion in Q3, though The Wall Street Journal points out that ad growth for Q3 slowed by 0.7 percent over Q2’s year-over-year increase.

Alphabet’s new CFO, Anat Ashkenazi, who joined in July as Ruth Porat’s successor, said in her first earnings call that streamlining will be needed so the company can further invest in AI. She also noted that higher capital expenditure should be anticipated for 2025.

“To adjust to the changing competitive landscape and an altered economy, Google has made cuts and initiated internal shakeups,” reports CNBC. “Ashkenazi said one of her priorities is to look across the organization for ‘further efficiencies’ so the company can invest in new areas and maintain its competitive edge and margins.”

Related:
Tech Giants See AI Bets Starting to Pay Off, The Wall Street Journal, 11/1/24
Meta and Microsoft: AI’s Spending Champs Won’t Be Tapping the Brakes, The Wall Street Journal, 10/31/24
Google’s AI-Fueled Gains in Cloud Bode Well for Amazon, Microsoft, Reuters, 10/30/24
Google CEO Says Over 25% of New Google Code Is Generated by AI, Ars Technica, 10/30/24