Google’s profits beat expectations on strong cloud computing growth

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Alphabet’s profit jumped 34 per cent in the third quarter, as the search giant reported strong growth in cloud computing amid robust demand for data centres and advanced chips used to train and run generative artificial intelligence models.

Net income was $26.3bn compared with $19.7bn in the same period a year earlier, exceeding analysts’ expectations for $22.8bn, the parent company of Google reported on Tuesday. Revenue rose 15 per cent to $88.3bn in the three months through to the end of September, beating analysts’ estimate for $86.3bn.

The standout unit was Google Cloud, whose revenue increased 35 per cent to $11.4bn. Revenue at the company’s core search and advertising businesses, including YouTube, rose 10 per cent to $65.9bn.

“We generated strong revenue growth in the quarter, and our ongoing efforts to improve efficiency helped deliver improved margins,” said chief executive Sundar Pichai. “In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals.”

The shares rose 4 per cent in after-hours trading. Alphabet stock had previously gained 22 per cent this year, giving it a market capitalisation of $2.1tn and making it the fourth most valuable listed company in the world behind Apple, Nvidia and Microsoft.

This is a developing story