Alphabet Surpasses Revenue Expectations with Surge in Ad Sales
Alphabet Inc. (NASDAQ: GOOGL), Google's parent company, exceeded third-quarter revenue expectations due to a significant increase in digital advertising sales and rising demand for AI-powered cloud services. The company’s digital advertising business grew by 10%, while Google’s cloud platform revenue surged by 35% to reach $11.35 billion, surpassing analysts' estimates of $10.86 billion.
The tech giant also reported earnings above expectations, with earnings per share of $2.12, exceeding the market average estimate of $1.85. Following the announcement, Alphabet's shares rose by 4% in after-hours trading. The stock had already increased by approximately 22% this year, reflecting overall market performance.
Alphabet CEO Sundar Pichai attributed the positive results to the company's investments in AI, highlighting benefits particularly for the Search and Cloud segments. Google continues to draw marketing budgets while maintaining a strong position in the digital advertising market, even as competitors like Instagram, TikTok, and Amazon.com make significant strides in advertising services.
Robust advertising sales reflect a vibrant online ad market supported by increased political spending ahead of the U.S. presidential elections and major events like the 2024 Paris Olympics, which ended in August. YouTube, a major driver of advertising revenue, reported sales of $8.92 billion, representing a 12% increase. The streaming service's revenue has surpassed $50 billion over the last four quarters.
Alphabet's total digital advertising sales rose from $59.65 billion to $65.85 billion. While Google’s cloud business represents a smaller portion of the company’s overall revenue, it is rapidly expanding as more businesses invest heavily in the cloud infrastructure necessary for AI technologies.
The company’s revenue increased by 15% in the July to September period, reaching $88.27 billion and exceeding analysts' estimates of $86.30 billion, according to LSEG data.