Alphabet Achieves Historic $100 Billion Quarterly Revenue Milestone Powered by AI Innovation and Cloud Growth

United States:

Alphabet, the parent company of Google, has achieved a historic milestone by reporting its first-ever quarterly revenue exceeding $100 billion on Wednesday. This remarkable achievement was driven by robust growth in its core search business and the rapidly expanding cloud division, both significantly enhanced by artificial intelligence technologies.

The technology giant recorded a 16 percent year-over-year revenue increase, reaching $102.3 billion in the third quarter. This performance exceeded analyst expectations and marked a significant achievement for the company established by Larry Page and Sergey Brin in 1998.

CEO Sundar Pichai expressed his satisfaction in a statement, noting, "Alphabet had a terrific quarter, with double-digit growth across every major part of our business."

The company's net income increased dramatically by 33 percent to $35 billion, highlighting Alphabet's successful leveraging of the artificial intelligence revolution that is transforming the technology sector.

Google's fundamental search and advertising operations remained the primary revenue generator, contributing $56.6 billion, up from $49.4 billion in the previous year. Additionally, YouTube advertising revenues showed strong growth, reaching $10.3 billion from $8.9 billion.

However, Google Cloud emerged as the standout performer, with revenues surging by 34 percent to $15.2 billion. This division, which competes directly with Amazon Web Services and Microsoft Azure, has become an essential growth driver for Alphabet.

Pichai emphasized that the company's ambitious AI strategy "is delivering strong momentum and we're shipping at speed," highlighting the global implementation of AI features in Google Search and the company's Gemini AI models.

The company reported that its Gemini App now serves over 650 million monthly active users, with an increasing number of users utilizing the company's AI Mode for search queries.

Nevertheless, these impressive results were somewhat overshadowed by a $3.5 billion fine imposed by the European Commission in September for violations of competition law in Google's ad tech business. Without this penalty, operating income would have shown a 22 percent increase instead of the reported nine percent.

The strong financial performance comes as Alphabet intensifies its capital expenditure to meet the growing demand for AI infrastructure. The company now anticipates 2025 capital expenditures between $91-$93 billion, reflecting substantial investments in data centers and computing power to support its AI ambitions.

Alphabet indicated that spending on capital expenditures would increase further next year, though specific details remain undisclosed at this time.

Both Microsoft and Meta, which also released their financial results on Wednesday, reported similar substantial investments in AI infrastructure. These facilities consume more energy than conventional data centers, placing additional pressure on electric power grids and utilizing local water resources for cooling purposes.

Alphabet also reported having more than 300 million paid subscriptions across various services including Google One and YouTube Premium.

Despite the overall strong growth, Alphabet's experimental "Other Bets" division, which includes the autonomous vehicle unit Waymo, reported a loss of $1.4 billion on revenues of just $344 million.

Google's shares have increased by nearly 40 percent in the third quarter. Investor confidence has been bolstered by the company's success in convincing a federal judge to reject a US government request that would have required Google to divest its Chrome browser as a remedy in an antitrust trial.

The judge was persuaded by arguments that Google's globally dominant search engine—the core of Google's business—faces significant competition from ChatGPT and other AI chatbots like Perplexity.

Nevertheless, Google's search revenue demonstrated robust growth, increasing by nearly 15 percent compared to the same quarter in the previous year.