Google parent reports double-digit growth in every major business, beats estimates

Investing.com -- Google parent Alphabet Inc Class A (NASDAQ:GOOGL) saw its shares climb over 4% in after-hours trading Wednesday after the search giant reported third-quarter earnings that decisively beat Wall Street expectations, driven by broad-based growth across advertising and cloud services. The company posted its first-ever quarter surpassing $100 billion in total revenue, a milestone underscoring its continued strength amid mounting competition and regulatory scrutiny.

The company reported diluted earnings per share of $2.87 for the quarter ended September 30, far exceeding analyst expectations of $2.29. Revenue rose 16% year-over-year to $102.35 billion, compared with consensus forecasts of $99.79 billion.

Google Cloud revenue surged 34% to $15.16 billion, boosted by demand for AI infrastructure and generative AI solutions, while Google Search & Other rose 15% to $56.57 billion. YouTube ad revenues gained 15% year-over-year to $10.26 billion, reflecting sustained engagement and advertiser interest in video formats.

Operating income rose to $31.23 billion, with an operating margin of 30.5%; excluding a $3.5 billion EC fine, adjusted operating margin was 33.9%. Net income rose 33% to $34.98 billion, while the company’s cloud backlog ballooned to $155 billion, giving investors strong visibility into future growth.

"Alphabet had a terrific quarter, with double-digit growth across every major part of our business. We delivered our first-ever $100 billion quarter," said CEO Sundar Pichai. “Our full stack approach to AI is delivering strong momentum… including the global rollout of AI Overviews and AI Mode in Search in record time.”

Capital expenditures soared to just under $24 billion for the quarter, as Alphabet continues to ramp investment in data centers and AI hardware. For the full year, the company now sees CapEx ranging between $91 billion and $93 billion amid AI-fueled infrastructure spending.

Alphabet said total advertising revenue surged to $74.18 billion, up 13%, with traffic acquisition costs increasing modestly to $14.88 billion. Paid subscriptions, led by Google One and YouTube Premium, exceeded 300 million, reflecting strength in direct-to-consumer services.

Despite regulatory headwinds, including the EC’s $3.5 billion competition fine, Alphabet’s outperformance and strong forward metrics have bolstered investor sentiment. With momentum across cloud, search, and AI, analysts are likely to view Alphabet’s Q3 results as a reaffirmation of its dominant position in digital tech.

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