Google's Parent Company Alphabet Surpasses Expectations
The tech giants are now reporting their Q3 earnings, and the first to announce is Google's parent company, Alphabet. The company's stock has surged by 4% after hours due to a strong beat on earnings. Here are the details:
- Q3 EPS $2.12, surpassing the estimate of $1.84
- Q3 Revenue $88.27 billion, surpassing the estimate of $86.45 billion
- Google advertising revenue $65.85 billion, surpassing the estimate of $65.5 billion
- Google Search & Other Revenue $49.39 billion, surpassing the estimate of $49.08 billion
- YouTube ads revenue $8.92 billion, surpassing the estimate of $8.89 billion
- Google Network Revenue $7.55 billion, surpassing the estimate of $7.41 billion
- Google Subscriptions, Platforms and Devices Revenue $10.66 billion, surpassing the estimate of $9.79 billion
- Google Services revenue $76.51 billion, surpassing the estimate of $75.24 billion
- Google Cloud revenue $11.35 billion, surpassing the estimate of $10.79 billion
- Other Bets revenue $388 million, surpassing the estimate of $377.9 million
- Operating income $28.52 billion, surpassing the estimate of $26.67 billion
- Google Services operating income $30.86 billion, surpassing the estimate of $28.47 billion
- Google Cloud operating income $1.95 billion, surpassing the estimate of $1.11 billion
- Other Bets operating loss $1.12 billion, slightly worse than the estimated loss of $1.16 billion
- Operating margin 32%, surpassing the estimate of 31.4%
- Capital expenditure $13.06 billion, surpassing the estimate of $12.88 billion
- The number of employees stands at 181,269, down from 182,381 a year ago.
Google's Stellar Cloud Numbers
Google's cloud numbers were impressive, with revenue increasing from $8.4BN to $11.3BN, beating estimates of $10.8BN. Investors were keen to hear more about the company's progress on AI, and CEO Sundar Pichai provided some insight:
"In Search, our new AI features are expanding what people can search for and how they search for it. In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals. And YouTube’s total ads and subscription revenues surpassed $50 billion over the past four quarters for the first time."
Alphabet's AI Investments
Like other Big Tech companies, Alphabet has been investing heavily in developing artificial intelligence. This strategy has helped drive demand for its cloud services, which saw revenue rise 32% in the first quarter. While Google remains a distant third in the cloud computing market, trailing Amazon and Microsoft, the company’s prowess in AI could help it close the gap.
Google's AI Challenges
Despite developing much of the underlying technology used in the AI boom today, Google has been battling the perception that it’s lagging behind Microsoft and OpenAI in rolling out new generative AI tools. The arrival of popular chatbots such as ChatGPT, which answers questions in a conversational tone rather than providing lists of links to other websites, has posed a threat to Google’s two-decade stranglehold on search.
Google's AI Dividend and Stock Buyback Program
As the company seeks to establish itself as a leader in AI, it wants to make sure that investors are rewarded to wait. The company not only announced a cash dividend at 20 cents per share that will be paid on December 16, 2024, to stockholders of record as of December 9, 2024, on each of the company’s Class A, Class B, and Class C shares, but also announced it repurchased $15.3 billion in stock under its new $70 billion buyback program.
Google's Advertising Competition
Despite the excitement around AI, search advertising remains the engine of Google’s lucrative business, and the company is facing heightened competition there. Meta has been seeding AI tools throughout its advertising business and Snap Inc. has also undergone a total revamp of its ad business to improve ad targeting. The digital ad market is recovering from a post-pandemic slump, buoyed by the Olympics Games this summer, but Google is increasingly vying for those ad dollars with Meta and Snap.
Google's Bright Spot: Cloud
Cloud has been a bright spot for Google, after it first became profitable early last year. Many young AI startups are founded by former Google employees, creating a strong pipeline of cloud clients.
For now, these concerns were on the backburner, with Alphabet's stock surging about 4% after hours, but still well below its all time high reached in early July when it briefly traded above $190.
Bottom Line
Google's parent company Alphabet has surpassed expectations in its Q3 earnings report, with strong performance across the board. The company's investments in AI and cloud services are paying off, but it faces stiff competition in the advertising market. What are your thoughts on these developments? Do you think Alphabet can maintain its momentum? Share this article with your friends and sign up for the Daily Briefing, which is every day at 6pm.
Google's Parent Company Alphabet Surpasses Expectations
The tech giants are now reporting their Q3 earnings, and the first to announce is Google's parent company, Alphabet. The company's stock has surged by 4% after hours due to a strong beat on earnings. Here are the details:
- Q3 EPS $2.12, surpassing the estimate of $1.84
- Q3 Revenue $88.27 billion, surpassing the estimate of $86.45 billion
- Google advertising revenue $65.85 billion, surpassing the estimate of $65.5 billion
- Google Search & Other Revenue $49.39 billion, surpassing the estimate of $49.08 billion
- YouTube ads revenue $8.92 billion, surpassing the estimate of $8.89 billion
- Google Network Revenue $7.55 billion, surpassing the estimate of $7.41 billion
- Google Subscriptions, Platforms and Devices Revenue $10.66 billion, surpassing the estimate of $9.79 billion
- Google Services revenue $76.51 billion, surpassing the estimate of $75.24 billion
- Google Cloud revenue $11.35 billion, surpassing the estimate of $10.79 billion
- Other Bets revenue $388 million, surpassing the estimate of $377.9 million
- Operating income $28.52 billion, surpassing the estimate of $26.67 billion
- Google Services operating income $30.86 billion, surpassing the estimate of $28.47 billion
- Google Cloud operating income $1.95 billion, surpassing the estimate of $1.11 billion
- Other Bets operating loss $1.12 billion, slightly worse than the estimated loss of $1.16 billion
- Operating margin 32%, surpassing the estimate of 31.4%
- Capital expenditure $13.06 billion, surpassing the estimate of $12.88 billion
- The number of employees stands at 181,269, down from 182,381 a year ago.
Google's Stellar Cloud Numbers
Google's cloud numbers were impressive, with revenue increasing from $8.4BN to $11.3BN, beating estimates of $10.8BN. Investors were keen to hear more about the company's progress on AI, and CEO Sundar Pichai provided some insight:
"In Search, our new AI features are expanding what people can search for and how they search for it. In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals. And YouTube’s total ads and subscription revenues surpassed $50 billion over the past four quarters for the first time."
Alphabet's AI Investments
Like other Big Tech companies, Alphabet has been investing heavily in developing artificial intelligence. This strategy has helped drive demand for its cloud services, which saw revenue rise 32% in the first quarter. While Google remains a distant third in the cloud computing market, trailing Amazon and Microsoft, the company’s prowess in AI could help it close the gap.
Google's AI Challenges
Despite developing much of the underlying technology used in the AI boom today, Google has been battling the perception that it’s lagging behind Microsoft and OpenAI in rolling out new generative AI tools. The arrival of popular chatbots such as ChatGPT, which answers questions in a conversational tone rather than providing lists of links to other websites, has posed a threat to Google’s two-decade stranglehold on search.
Google's AI Dividend and Stock Buyback Program
As the company seeks to establish itself as a leader in AI, it wants to make sure that investors are rewarded to wait. The company not only announced a cash dividend at 20 cents per share that will be paid on December 16, 2024, to stockholders of record as of December 9, 2024, on each of the company’s Class A, Class B, and Class C shares, but also announced it repurchased $15.3 billion in stock under its new $70 billion buyback program.
Google's Advertising Competition
Despite the excitement around AI, search advertising remains the engine of Google’s lucrative business, and the company is facing heightened competition there. Meta has been seeding AI tools throughout its advertising business and Snap Inc. has also undergone a total revamp of its ad business to improve ad targeting. The digital ad market is recovering from a post-pandemic slump, buoyed by the Olympics Games this summer, but Google is increasingly vying for those ad dollars with Meta and Snap.
Google's Bright Spot: Cloud
Cloud has been a bright spot for Google, after it first became profitable early last year. Many young AI startups are founded by former Google employees, creating a strong pipeline of cloud clients.
For now, these concerns were on the backburner, with Alphabet's stock surging about 4% after hours, but still well below its all time high reached in early July when it briefly traded above $190.
Bottom Line
Google's parent company Alphabet has surpassed expectations in its Q3 earnings report, with strong performance across the board. The company's investments in AI and cloud services are paying off, but it faces stiff competition in the advertising market. What are your thoughts on these developments? Do you think Alphabet can maintain its momentum? Share this article with your friends and sign up for the Daily Briefing, which is every day at 6pm.
