SAN FRANCISCO — Google’s corporate parent on Wednesday announced its first-ever quarter with more than US$100 billion in revenue, a milestone that illustrates the unwavering power of its internet empire amid legal and competitive threats.
The news of Alphabet Inc.’s accelerating growth in revenue and profit comes on the heels of a court ruling in the U.S. Justice Department’s landmark monopoly case against Google’s dominant search engine that was widely seen as a mild rebuke that wouldn’t hobble the company.
Alphabet performed like a powerhouse during the July-September period, delivering a profit of nearly US$35 billion, or US$2.87 per share, a 33 per cent increase from the same time last year. Revenue rose 16 per cent from last year to US$102.3 billion. Both figures easily exceeded the analysts’ projections that steer the stock market.
Investors celebrated the third-quarter numbers by driving up Alphabet’s stock price 6 per cent in Wednesday’s extended trading.
That’s on top of a 30 per cent surge in Alphabet’s shares that has created nearly US$770 billion in stockholder wealth since early September. That’s when U.S. District Judge Amit Mehta rejected a U.S. Justice Department proposal to break up Google to curb the abuses of a search engine that was declared an illegal monopoly last year.
Mehta’s cautious handling of Google’s search monopoly largely reflected his belief that rapid advances in artificial intelligence technology have already been spawning conversational “answer engines” from rising tech stars such as ChatGPT and Perplexity that are giving consumers more options.
ChatGPT’s creator OpenAI and Perplexity have released AI-powered web browsers to compete against Google’s industry-leading Chrome browser that the Justice Department had unsuccessfully tried to persuade Mehta to order to be sold.
But Google has been implanting more AI features into both its search engine and Chrome, as well as its other products, as part of its effort to protect its turf while also expanding into new technological frontiers. In a sign of the inroads those efforts are making, Alphabet CEO Sundar Pichai disclosed Wednesday that Google’s AI-powered Gemini app now has 650 million monthly users.
Like other major tech companies, Google has been bankrolling its AI ambitions with a spending spree that has raised worries about a potential bubble that will eventually burst. Alphabet now expects to budget US$91 billion to US$93 billion for capital expenditures this year, up from US$85 billion in its previous quarterly report issued in July, with most of the money earmarked for the massive data centers needed to power AI.
Alphabet has the luxury of drawing upon a lucrative ad network that Google has spent a quarter century building. Google’s ad sales totaled US$74.2 billion in the third quarter, a 13 per cent increase from last year.
The AI craze has been a boon for Google’s Cloud division that oversees data centers for other companies, an endeavor that has turned into the fastest growing part of Alphabet. Google Cloud posted revenue of US$15.2 billion in the past quarter, up 34 per cent from last year.
Michael Liedtke, The Associated Press
