AI drives Alphabet profit boost

Alphabet, the parent company of Google, beat Wall Street’s profit and revenue expectations as artificial ­intelligence technology continues to drives growth in cloud computing sales and search engine advertising.
Sundar Pichai, Alphabet’s chief executive, hailed the “extraordinary” momentum across the business as the company reported a 33.6 per cent increase in third-quarter net profit to $26.3 billion, outpacing Wall Street estimates of $22.9 billion.
Revenue rose 15 per cent to $88.3 billion, ahead of consensus analyst estimates of $86.4 billion. Alphabet’s shares rose $11.20, or 6.6 per cent, to $182.30 in after-hours trading.
Pichai said: “Our commitment to innovation, as well as our long-term focus and investment in AI, are paying off with consumers and partners benefiting from our AI tools.” The company is the first of five of the big technology firms to report earnings this week, ahead of Amazon, Meta Platforms, Microsoft and Apple.
Optimism around the corporate results helped propel the technology-heavy Nasdaq Composite index to its 28th record close of the year yesterday with a rise of 0.8 per cent to 18,712.75, breaking the previous closing high in July.
Google, a leading search engine for the past two decades, is investing heavily in AI technology to maintain its market share amid competition from OpenAI’s ChatGPT and Meta Platforms’ Meta AI.
Revenue from Google services, including search and subscriptions, rose 13 per cent to $76.5 billion. Sales from cloud computing, which is used by ­businesses to power AI technologies, rose 35 per cent to $11.4 billion.
Pichai told analysts that AI developments in search were “transforming the user experience”, expanding what people can search for and how much time they spend on the platform. People were asking longer and more complex queries, he said.
Meanwhile, YouTube’s total ads and subscription revenues surpassed $50 billion over the past four quarters for the first time. Ad sales for the video streaming service, owned by Alphabet, rose 12 per cent to $8.9 billion.
The results come as Google faces the risk of a potential attempted break-up by the US Department of Justice, which has accused the search engine of stifling competition to dominate the display advertising market and push up prices for publishers and advertisers. Alphabet is disputing the allegations.