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Alphabet, Google’s parent company, reported its third-quarter earnings on Tuesday.
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The company beat on revenue, EPS, its ads business, and Google Cloud revenue, which grew 35% year over year.
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CEO Sundar Pichai said the company’s AI investments are “paying off.”
Google’s parent company, Alphabet, released better-than-expected earnings for the third quarter after the closing bell on Tuesday.
Revenue from Google Cloud grew 35% year over year to $11.4 billion, bolstered by “accelerated growth” in the company’s AI products, the company said.
The company’s shares were up more than 5% in after-hours trading.
Here are the key numbers for the third quarter compared to analysts’ estimates:
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Earnings per share: $2.12 vs. $1.83 expected
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Revenue: $88.27 billion vs. $86.44 billion expected
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Google Advertising: $65.9 billion vs. $65.5 billion
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YouTube advertising revenue: $8.92 billion vs. $8.89 billion expected
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Google Cloud revenue: $11.35 billion vs. $10.79 billion expected
Alphabet and Google CEO Sundar Pichai said the company’s AI investments were “paying off.”
“In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals,” Pichai added. “And YouTube’s total ads and subscription revenues surpassed $50 billion over the past four quarters for the first time.”
Pichai gave an update on the company’s evolving search product, which has been rolling out AI-generated answers called AI Overview in Google results. The AI results now reach over 1 billion users on a monthly basis, he said, and ads in AI Overview are “performing well.”
Google said its employees are also increasingly using AI products at work.
“Today, more than a quarter of all new code at Google is generated by AI then reviewed and accepted by engineers,” Pichai said.
The search giant’s earnings arrived less than three months after a federal judge ruled the company violated antitrust law by illegally maintaining a search monopoly. Google is also fighting a separate antitrust battle over its adtech business. A potential breakup hangs over the company’s head, and protracted legal fights are expected.
Pichai briefly addressed the legal challenges on Tuesday’s call.
“We plan to vigorously defend these cases, and some of the early proposals from the DOJ have been far-reaching,” he said. He added that, if approved, the proposed remedies “could have unintended consequences, particularly to the dynamic tech sector and the American leadership there.”