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Investing.com - Shares of Google-parent Alphabet (NASDAQ:GOOGL) climbed more than 6% in premarket U.S. trading on Thursday after the search giant reported third-quarter earnings that beat Wall Street expectations, driven by broad-based growth across its advertising and cloud services operations.
Alphabet posted its first-ever quarter surpassing $100 billion in total revenue. The top-line figure rose 16% versus a year ago to a record $102.35 billion, compared with consensus forecasts of $99.79 billion.
Diluted earnings per share of came in at $2.87 for the quarter ended September 30, exceeding analyst expectations of $2.29.
Capital expenditures soared to just under $24 billion during the period, as Alphabet continues to ramp investment in data centers and AI hardware to bolster its position in the battle to harness and monetize the nascent technology. For the full year, the company now sees spending ranging between $91 billion and $93 billion, up from $52.5 billion in 2024.
“Our full stack approach to AI is delivering strong momentum […] including the global rollout of AI Overviews and AI Mode in Search in record time,” said CEO Sundar Pichai, referring to a new service .
Google’s cloud-computing revenue surged 34% to $15.16 billion, boosted by demand for AI infrastructure and generative AI solutions, while Google Search revenues rose 15% to $56.57 billion. Ad revenues from Google’s YouTube video platform gained 15% to $10.26 billion.
Operating income rose to $31.23 billion, with an operating margin of 30.5%. Net income rose 33% to $34.98 billion, while the company’s cloud backlog ballooned to $155 billion.
Alphabet said total advertising revenue surged to $74.18 billion, up 13%, with traffic acquisition costs increasing modestly to $14.88 billion. Paid subscriptions, led by Google’s expanded cloud storage service and YouTube’s ad-free premium offering, exceeded 300 million.
In a note describing Alphabet’s quarterly returns as "strong" despite mounting competition from ChatGPT-maker OpenAI, which launched its own browser earlier this month, analysts at BofA Securities said Google is "well positioned" for the AI arms race.
(Scott Kanowsky contributed reporting.)