Alphabet Reports Strong Third Quarter, Boosted by AI Investments and Cloud Growth

Alphabet, Google’s parent company, announced on Tuesday that its investments in artificial intelligence (AI) are yielding positive outcomes, as evidenced by a remarkable 35% growth in its cloud services. Additionally, US election-related spending contributed to a boost in YouTube advertisement revenues during the third quarter.

After the announcement, Alphabet’s shares climbed nearly 6% in after-hours trading, a welcome gain reflected similarly in the shares of top competitors Amazon and Microsoft, which saw about a 1% rise.

Alphabet exceeded expectations for both revenue and earnings in the third quarter, with its core Search and YouTube ad segments each experiencing a 12% increase. Senior equity analyst Matt Britzman noted that Alphabet’s substantial cloud growth supports the notion that major cloud providers are poised to thrive amid the AI revolution.

In response to competition, particularly from Microsoft in AI, Alphabet has been investing heavily in its Gemini AI chatbot, while capital expenditures rose 62% to $13 billion. The growth in cloud services reached $11.35 billion, marking the fastest increase in eight quarters and showing a shift toward diversified revenue streams.

Despite a 10% increase in digital advertising sales, Alphabet is anticipated to lose market share in the advertising sector to rivals like Amazon and TikTok, as projected by analysts.