Alphabet, parent of Google and YouTube, posted a third consecutive quarter of better-than-expected earnings when it reported earnings on Tuesday. The tech giant had far exceeded analyst expectations for the previous two quarters, and Tuesday’s results showed growth in both digital advertising and demand for Google Cloud. Shares rose in after-hours training.
“The momentum throughout the company is extraordinary. “Our commitment to innovation, as well as our long-term focus and investment in AI, is paying off, with consumers and partners benefiting from our AI tools,” said CEO Sundar Pichai.
Analysts expected year-over-year revenue growth of 12% to $86.23 billion and earnings per share of $1.85. Alphabet reported 15% overall growth with $88.27 billion in revenue for the quarter and $2.12 earnings per share. Advertising revenue grew 10% and cloud services revenue increased 35%. Pichai highlighted the growth on YouTube in both ads and subscriptions, which also exceeded analysts’ expectations.
Enthusiasm for new AI products in recent years has boosted Google’s stock price, which is up 20% in 2024 and more than 150% over the past five years. The company has been a leading player in the rise of AI, although it is often seen as a step behind the cutting-edge offerings of OpenAI, which has partnered closely with rival Microsoft. When asked about the perception of being a step behind, Pichai compared Google to a neural network, the underlying technique used to train AI that mimics the human brain, and said the company was “forming new synapses” to facilitate innovation.
However, along with that expansion has come an increase in spending. Google’s capital expenditures rose 62 year over year to $13 billion. The company expects it to remain at that level next quarter and increase further in 2025.
Despite its success, Google has faced a number of legal problems in 2024. The results call is the first since the company’s historic loss in its antitrust case against the US government. Lawyers at the US Department of Justice are weighing a proposal to break up the Android maker after a judge declared it an illegal monopoly. Multibillion-dollar deals between Google and other tech giants, a focus of the trial, were deemed anticompetitive; The judge can undo them after the monopoly ruling or completely separate the subsidiaries from the parent company.
Asked about the antitrust litigation on Tuesday, Pichai said: “Some of the Justice Department’s early proposals have been far-reaching and I think they could have unintended consequences for the dynamic technology sector and American leadership there. We plan to participate very vigorously there.”
Earlier this month, Google was ordered to overhaul the Google Play store as a result of another antitrust loss, at the hands of Fortnite maker Epic Games. Google must make Android apps available from competing sources and cannot prohibit the use of in-app payment methods, according to the judge’s order.
Another antitrust trial, which began in September, is still ongoing. The US Department of Justice alleges that Google has built an illegal monopoly on online advertising.
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Google’s self-driving car division, Waymo, has deployed a fleet of self-driving vehicles in several U.S. cities and has begun offering paid rides, 150,000 a day, Pichai said on the call. On the same day as the earnings report, the subsidiary announced that it had raised $5.6 billion in financing from both its parent company and external investors. Although not a significant revenue driver compared to the billions generated by advertising, the autonomous vehicle business has growth potential and the pace at which Waymo can establish operations in new cities is increasing, Pichai said at the conference. phone about earnings.
