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(Reuters) - Google parent Alphabet topped third-quarter revenue expectations on Tuesday, helped by a 10% jump in its digital advertising business and an AI-driven jump in demand for its cloud services. Alphabet shares, which closed up 1.8% on Tuesday, were up 4% in after-hours trading.
The stock has risen nearly 22% this year, in line with the broader market. Alphabet also beat profit expectations with earnings of $2.12 per share, compared with an average market estimate of $1.
85, according to LSEG. CEO Sundar Pichai said in a statement that investments in AI were "paying off" through use of and sales in its Search and Cloud businesses. Google's dominant position in the digital advertising market has helped attract marketing dollars even as social media platforms such as Instagram and TikTok and ad services offered by the likes of Amazon.
com make big inroads with marketers. The healthy ad sales numbers from Google also suggest that the online advertising market remains strong, thanks to increased political spending ahead of the U.S.
presidential election, as well as big-ticket events such as the 2024 Paris Olympics which ended in August. YouTube revenue surpassed $50 billion over the past four quarters, he said. Ad sales for the video streaming service rose 12% to $8.
92 billion. Digital advertising sales - the biggest chunk of Alphabet's total revenue - rose to $65.85 billion from $59.
65 billion. Revenue from Google's cloud platform grew 35% to $11.35 billion, beating analysts' estimate of $10.
86 billion. This business, though a small portion of Alphabet's revenue, has been growing rapidly as enterprises double down on cloud spending which is essential to power artificial intelligence technologies. Revenue increased 15% to $88.
27 billion in the July-September period, while analysts on average expected $86.30 billion, according to LSEG data. (Reporting by Deborah Sophia in Bengaluru, and Kenrick Cai and Greg Bensinger in San Francisco; Additional reporting by Akash Sriram in Bengaluru; Editing by Anil D'Silva, Sayantani Ghosh and Matthew Lewis).
