Tuesday marked a promising day for Alphabet. Google’s parent company boasted $88.27 billion in revenue for the third quarter, surpassing the London Stock Exchange’s (LSEG) $86.30 billion expectation. According to Alphabet CEO Sundar Pichai, the company’s 15% year-over-year growth was AI-driven in the third quarter. In his call to investors last evening, Pichai attributed the majority of Alphabet’s earning results to cloud revenue, which touched $11.35 billion.
Cloud revenue rose by 35% in Q3 of 2024, a steep climb from $8.41 billion a year ago. The tech behemoth’s search business generated $49.4 billion in revenue, which marks a 12.3% uptick from 2023. Google’s landmark search engine continues to top Alphabet’s revenue ranking, informed Anat Ashkenazi, Alphabet’s CFO, on the same call on Tuesday.
AI takes center stage in Alphabet’s strongest business models
According to Ashkenaz, Alphabet is looking to leverage AI to cut costs across its complex ecosystem. “I plan to build on these efforts but also evaluate where we might be able to accelerate work and where we might need to pivot to free up capital for more attractive opportunities,” said Ashkenazi, who joined Alphabet in June.
Chief Business Officer Philipp Schindler informed investors on Tuesday’s earnings call that AI is bolstering YouTube recommendations. Schindler noted that Google’s Gemini has given YouTube the ability to “recommend more relevant, fresher, and personalized content to the viewer.”
On Tuesday, Alphabet reported advertising revenue of $65.85 billion, an increase from $59.65 billion in 2023. This demonstrates that Google’s advertising business is still growing, although at a slower rate compared to the second quarter of 2024.
Alphabet’s impressive earnings set the stage for a week of revenue projections by tech giants like Meta, Microsoft, Apple, and Amazon. In after-hours trading, Alphabet’s shares climbed by 6%, a direct result of impressive earnings in Q3.
