The US technology company Alphabet, the parent company of Google, reported an impressive profit increase of 34% in the third quarter of the 2024 fiscal year. The company announced a net profit of 26.3 billion US dollars, compared to 19.7 billion US dollars in the same quarter the previous year. This significantly exceeded analysts' estimates of 22.8 billion US dollars.

The revenue increased by 15% to $88.3 billion, exceeding the expected $86.3 billion. Particularly noteworthy is the Google Cloud business segment, which achieved a revenue increase of 35% to $11.4 billion. The operating profit in this segment rose sevenfold compared to the previous year to $1.9 billion, highlighting the strong demand for cloud services and data processing services to support generative AI models.

In the core business of search and advertising, revenue increased by 10% to $65.9 billion. YouTube recorded a growth of 12%, reaching a revenue of $8.9 billion. For the first time in the past four quarters, Google secured advertising and subscription revenues of over $50 billion, supported by expansion into sports areas such as the National Football League.

CEO Sundar Pichai emphasized in his statement: "We achieved strong revenue growth this quarter, and our ongoing efficiency improvements have led to improved margins. In the cloud sector, our AI solutions are driving deeper product adoption among existing customers, acquiring new customers, and closing larger contracts.

Analyst Brent Thill from Jefferies praised the results and highlighted the strength in the areas of subscriptions and cloud. "The results show a significant outperformance in all segments, with particular strength in the areas of subscriptions and cloud," commented Thill.

The shares of Alphabet rose by over 5% in after-hours trading, reflecting the positive sentiment of investors in light of the strong quarterly figures. With a market capitalization of $2.1 trillion, Alphabet remains the fourth most valuable publicly traded company in the world, behind Apple, Nvidia, and Microsoft.

Despite the impressive numbers, Alphabet faces several challenges. New AI-powered chatbots like OpenAI's ChatGPT and Anthropic's Claude are increasingly competing with Google's core business. In response, Google has introduced "AI Overviews" that provide direct answers to search queries instead of just displaying a list of links. Additionally, the company is struggling with antitrust lawsuits, including a significant ruling by the US Department of Justice that confirmed Google's monopolistic practices in the search business.

Alphabet continued to invest $13.1 billion in capital expenditures in the third quarter, an increase from $8.1 billion in the previous year. These investments are directed towards the expansion of data centers and advanced chips, which are essential for AI applications.

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"Finally, Alphabet paid a dividend of 20 cents per share, which amounts to approximately 2.5 billion US dollars. This follows the first dividend payment of the year and marks a departure from the previous policy of returning capital to investors exclusively through share buybacks.