Google parent Alphabet beats forecasts with first $100bn quarter | Alphabet

Google parent company Alphabet reported third-quarter earnings on Wednesday, showing steady growth in its core advertising business and cloud computing division, beating Wall Street forecasts for first-quarter revenue of $100 billion.

The company excited Wall Street even as it announced it would spend billions of dollars more than previously anticipated; Shares rose in after-hours trading. Alphabet raised its capital spending guidance in its financial filings, saying it will spend between $91 billion and $93 billion next year; Almost all of this amount will be spent on infrastructure such as data centers that support artificial intelligence products that have become an integral part of the company’s business. This estimate is higher than the original statement of $75 billion announced in February and the revised figure of $85 billion announced in July.

The company reported total revenue of $102.35 billion for the quarter, compared to analysts’ average estimate of $99.89 billion, according to data compiled by LSEG.

Google Cloud has continued to be one of Alphabet’s fastest-growing segments, benefiting from growing enterprise demand for AI-powered infrastructure and data analytics services. The unit had revenue of $15.16 billion, beating estimates of $14.72 billion. Performance likely increased as enterprise demand for AI infrastructure increased.

The unit continues to close the gap on larger rivals Microsoft Azure and Amazon Web Services, aided by strong use of Vertex AI and custom tensor processing units.

Competition in the broader AI and cloud market is intensifying as rivals aggressively undercut prices and introduce new productive AI capabilities.

Alphabet’s advertising unit, which generates the vast majority of the company’s revenue, is competing in a crowded field of rivals vying for more ad dollars as low interest rates are expected to stimulate the economy.

However, analysts noted that advertisers’ spending was cautious in some industries grappling with economic uncertainty due to pressures from tariff costs and a rapidly evolving global trade environment.

Still, Wall Street expects the company to benefit from advertisers moving away from experimental ad platforms like Snapchat and others.

The results come just days after Microsoft and SoftBank Group-backed OpenAI unveiled its AI-powered Atlas browser, which aims to compete directly with Google’s Chrome browser, its core search engine and the world’s most popular browser.

The launch represents one of the most significant challenges to Google’s search dominance in years and will be a key focus for investors listening to management’s response to the growing competitive threat to its most lucrative business.