Google parent Alphabet topped Wall Street revenue targets on Tuesday in third-quarter financial results that showed strong growth in the company’s core businesses and offered a glimpse of the potential payoff from its longrunning AI efforts.
The company said revenue grew 15% to $88.3 billion in the third quarter, above Wall Street targets of $86.3 billion. Alphabet’s focus on keeping costs in check meanwhile, help boost net income 34% from the year-ago period, to $26 billion, or $2.12 per share.
During the earnings call, Alphabet CEO Sundar Pichai said that more than one quarter of all new code at Google is now generated by AI, with human engineers checking the work for accuracy.
Alphabet shares rose 5.3% to $180.20 in after-hours trading on Tuesday, following the results.
Google search remained the company’s prime revenue engine, bringing in $49.3 billion in revenue over the quarter, an increase of 12% from a year ago. Revenue from YouTube reached $8.9 billion, an increase of 12%, while revenue from Cloud hit $11.3 billion, an increase of 34%. Meanwhile TAC, or traffic acquisition costs, were $13.7 billion, up almost 9% and earnings per share rose to $2.12.
Google is locked in a fierce competition with rivals Amazon, Meta, and Microsoft on several fronts, including cloud computing, advertising, and AI. Those companies are due to report their quarterly earnings on Wednesday and Thursday.
Prior to Wednesday’s earnings call, Pichai said in a statement that company’s “long-term focus and investment in AI” is starting to pay off with both enterprise customers and regular consumers.
“In Search, our new AI features are expanding what people can search for and how they search for it,” Pichai said. “In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals. And YouTube’s total ads and subscription revenues surpassed $50 billion over the past four quarters for the first time.”
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