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Google parent Alphabet exceeded revenue expectations on Wall Street in the third quarter financial results released on Tuesday, showing strong growth in the company’s main businesses and hinting at the potential benefits of its ongoing AI efforts.
The company reported a 15% increase in revenue to $88.3 billion in the third quarter, surpassing Wall Street’s projection of $86.3 billion. Alphabet’s focus on managing costs effectively helped drive net income up by 34% from the same period last year, reaching $26 billion, or $2.12 per share.
During the earnings call, Alphabet CEO Sundar Pichai disclosed that more than a quarter of all new code at Google is now generated by AI, with human engineers verifying the accuracy of the work.
Following the results, Alphabet shares surged by 5.3% to $180.20 in after-hours trading on Tuesday.
Google search continued to be the primary revenue driver for the company, generating $49.3 billion in revenue during the quarter, marking a 12% increase from the previous year. YouTube revenue reached $8.9 billion, up 12%, while Cloud revenue totaled $11.3 billion, a 34% increase. Additionally, traffic acquisition costs (TAC) amounted to $13.7 billion, rising by almost 9%, and earnings per share climbed to $2.12.
Prior to the call, Pichai stated in a release that the company’s “long-term focus and investment in AI” are beginning to yield results with both corporate customers and regular consumers.
“In Search, our new AI features are expanding what people can search for and how they search for it,” Pichai noted. “In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers, and secure larger deals. Moreover, YouTube’s combined ad and subscription revenues surpassed $50 billion over the past four quarters for the first time.”
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