- Alphabet, Google's parent company, reported its third-quarter earnings on Tuesday.
- The company beat on revenue, EPS, its ads business, and Google Cloud revenue, which grew 35% year over year.
- CEO Sundar Pichai will field questions from analysts during a 4:30 p.m. ET earnings call.
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 3% in after-hours trading.
Here are the key numbers for the third quarter compared to analysts' estimates:
- Earnings per share: $2.12 vs. $1.83 expected
- Revenue: $88.27 billion vs. $86.44 billion expected
- Google Advertising: $65.9 billion vs. $65.5 billion
- YouTube advertising revenue: $8.92 billion vs. $8.89 billion expected
- Google Cloud revenue: $11.35 billion vs. $10.79 billion expected
Source for analyst expectations: Bloomberg
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 also gave an update on the company's evolving search product, which has been rolling out AI Overviews, or AI-generated summaries, in Google results. The AI results will now reach over 1 billion users on a monthly basis, he said, and ads in AI Overview are "performing well."
Google also said its employees are 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. Its multibillion-dollar-a-year search deal with Apple and other paid partnerships came under the microscope. A potential breakup hangs over the company's head, and a protracted legal fight is expected.
Google is also fighting a separate antitrust battle over its adtech business. The DOJ and 17 state attorneys general alleged it used acquisitions and anticompetitive ad-auction tactics to build a monopoly. That case, which could have sweeping ramifications for the digital ad industry, is still underway, with closing arguments next month and a ruling expected in the new year.
The company in October also announced a major reorganization amid its growing AI efforts, moving the Gemini app team under the Google DeepMind team led by Demis Hassabis.
"Google's results this quarter show that it can perform despite serious regulatory threats to its ads business," Emarketer senior analyst Evelyn Mitchell-Wolf told Business Insider.
"As competition rises around its core search business, Google's defense, grounded in AI, is locked in, and it heads into the holiday season well positioned to win ad budgets," Mitchell-Wolf added.
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