Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments.
Alphabet Inc. delivered a robust third-quarter performance, exceeding Wall Street expectations with results that underscore its resilience and adaptability across core business segments sending shares 5.46% higher in after-hours trading.
Total revenue surged by 15% year-on-year to $88.3 billion, outpacing analysts’ forecasts of $86.4 billion. This revenue growth was driven by Alphabet’s primary income sources—Google Search and advertising—while its Cloud segment demonstrated significant gains, helping to alleviate concerns about potential margin pressures in 2025.
Alphabet’s advertising revenue totalled $65.9 billion, with Google Search alone contributing $49.4 billion—a 12% increase over the prior year. This performance underscores the ongoing relevance of Alphabet’s flagship search service despite competition from platforms like Amazon and TikTok. Meanwhile, YouTube also made a notable impact, with ad revenue rising 12% to $8.9 billion, benefiting from election-related advertisements and a growing base of engaged viewers. Diversified revenue from Google’s subscriptions, platforms, and devices also contributed significantly, standing at $10.7 billion for the quarter.
Alphabet’s Cloud segment was a standout, posting an impressive 35% growth in revenue, totalling $11.4 billion and surpassing analysts’ estimates of $10.8 billion. This segment reported a record operating profit of $1.95 billion, showcasing the potential of Google Cloud as a key growth engine. Leveraging its advancements in artificial intelligence (AI) and custom-built TPU chips, Alphabet has been able to attract new clients and deepen partnerships with existing ones, making strides against leading competitors Amazon and Microsoft in the AI-driven cloud market. Alphabet’s commitment to its AI investments is further underscored by its capital expenditure of $13 billion, a 62% increase from the previous year.
Beyond its revenue and profit gains, Alphabet has also maintained a strong operating margin of 32%, exceeding the anticipated 31.4%, as it effectively balances growth and disciplined cost management. The favourable third-quarter results led to a 4% rise in Alphabet’s share price in after-hours trading, reflecting investor confidence in the company’s multi-segment growth strategy. Alphabet’s investments in AI are not only enhancing its cloud offerings but are also expected to support long-term profitability as the company’s digital ecosystem expands.
Despite regulatory scrutiny and intensifying competition, Alphabet’s adaptability and strategic investment in emerging technologies continue to position it for growth. With AI and Cloud increasingly central to its operations, Alphabet is set to strengthen its leadership in digital services.
As a reminder, Alphabet’s inclusion in the US Growth portfolio is based on fundamentals such as profitability and valuation, and we do not foresee these results seeing GOOGL removed from the portfolio in the November rebalance.
