Alphabet beats top and bottom lines, boosted by cloud revenue

Google parent Alphabet reported third-quarter earnings that beat the top and bottom lines with strong revenue growth from the company’s cloud unit.

The company’s shares rose 4% in after-hours trading.

Here are the results:

• Earnings per share: $2.12 vs $1.85 expected by LSEG
• Income: $88.27 billion vs $86.30 billion is expected by LSEG

Here are other numbers Wall Street saw:

• YouTube ad revenue: $8.92 billion vs. $8.89 billion, according to StreetAccount
• Google Cloud Revenue: 11.35 billion dollars vs. $10.88 billion according to StreetAccount
• Traffic Acquisition Cost (TAC): $13.72 billion vs. $13.53 billion, according to StreetAccount

Alphabet’s revenue grew 15% year over year, which is stronger than the same quarter last year.

The company reported cloud revenue of $11.35 billion, up nearly 35% from $8.41 billion a year ago. The company attributed its strong cloud performance to its AI offering, which includes subscriptions for enterprise customers.

Alphabet CEO Sundar Pichai opened his call with investors, saying the company’s “full stack” of AI products are now working at scale and being used by Google’s billions of users, which “creates a virtuous cycle.”

Search companies’ strong quarter kicks off a big week of earnings for tech’s mega-cap companies. Meta and Microsoft report on Wednesday, followed by Apple and Amazon on Thursday.

The company reported advertising revenue of $65.85 billion. That was up from $59.65 billion a year ago, showing that Google’s advertising business continues to grow, albeit at a slower pace than in the second quarter.

YouTube’s ad revenue just beat analysts’ expectations and showed better growth than last quarter. The Google-owned company is facing increased pressure from other advertising options such as Netflix, TikTok and Amazon.

Net income rose to $26.3 billion, or $2.12 per share, compared with $19.7 billion, or $1.55 per share, in the year-ago quarter.

Other bets, which include the company’s life sciences unit Verily and self-driving car unit Waymo, reported revenue of $388 million in the third quarter. That’s up from $297 million a year ago.

Last week, Waymo closed a $5.6 billion funding round to expand its robot taxi service in Los Angeles, San Francisco and Phoenix and to several cities.

Google Lens, the company’s image recognition product that uses mobile cameras and photos, is now used for over 20 billion visual searches a month, Pichai said. It is one of the fastest growing search products and is often used for shopping, he added.

Alphabet’s third quarter was filled with turmoil both externally and internally, including at its top ranks and its most important business.

Earlier this month, the company replaced Prabhakar Raghavan, the company’s head of search and advertising since 2018, with Nick Fox, a longtime executive known for his role in Google’s Assistant unit. In addition, the team working on the Gemini app, which includes the company’s artificial intelligence direct-to-consumer products, will join Google DeepMind under head Demis Hassabis.

The company announced Tuesday that it is evaluating how this reorganization will affect its segment operating results.