Alphabet, Google"s parent company, reported third-quarter earnings on Tuesday that beat Wall Street expectations. The company"s revenue grew 11 percent year-over-year to $76.7 billion. However, shares fell about 5 percent in after-hours trading as revenue from its cloud business fell short of analysts" projections.
Alphabet earned $1.55 per share on revenue of $76.03 billion for the third quarter ended September 30th. Analysts surveyed by LSEG (formerly Refinitiv) were expecting $1.46 per share on revenue of $75.80 billion.
Advertising continues to be Google"s core business and main profit driver. Ad revenue grew 13 percent to $59.65 billion, reversing a slowdown during the economic downturn. YouTube ads specifically rose 12 percent to $7.95 billion, beating analysts" estimates of $7.82 billion. The video platform helped offset inflation pressures in other areas of Google"s ad business.
However, Alphabet"s cloud division, Google Cloud, saw revenue of $8.41 billion for the quarter, missing StreetAccount projections of $8.64 billion. Still, cloud sales were up 22 percent year-over-year as the company aims to challenge market leaders Amazon Web Services and Microsoft Azure.
Other Bets, Alphabet"s portfolio of non-ad businesses such as Waymo, reported an increase in revenue to $297 million from $208 million a year earlier. However, the unit continued to lose money, with an operating loss of $1.19 billion versus $1.23 billion in the prior year.
Analysts say generative AI could significantly impact Google"s search and advertising dominance if it reshapes how people search for information online. The company is racing to integrate such technology into more products following the rollout of OpenAI"s ChatGPT.
Earlier this year, Google announced a major layoff as part of its cost-cutting efforts. The company has made the decision to reduce its workforce by 12,000 people. This is roughly 6 percent of its total headcount.
In other news, Microsoft has just announced its latest financial figures. The company"s total revenue was $56.5 billion, up 13 percent from last year.