Google parent Alphabet Inc reported strong third-quarter results yesterday, with revenue up 15% year-on-year to $88.3 billion, driven by strong business performance crucial advertising and the growth of cloud services.

The tech giant’s net profit jumped 34 percent to $26.3 billion, while earnings per share rose 37 percent to $2.12.

Operating margin increased significantly, increasing 4.5 percentage points to 32 percent, reflecting improved cost efficiency within one of the world’s largest companies.

Photo: Reuters

“Our commitment to innovation and our long-term focus and investments in AI are paying off as consumers and partners benefit from our AI tools,” said CEO Sundar Pichai, referring to the growing field of artificial intelligence (AI).

The results showed that Google is holding strong despite fears that the search engine heavyweight has been left behind in the AI ​​race.

Google also faces growing pressure as its globally dominant search engine competes for ads with an ever-widening array of platforms, including Meta Platforms Inc, Amazon.com Inc, Apple Inc, TikTok and even streamers such as Netflix Inc.

But Evelyn Mitchell-Wolf, senior analyst at Emarketer, said Google had proven its defense “was locked in and it was heading into the holiday season in a good position to win advertising budgets.”

The company also addressed the question of whether its search engine would stand up to the growing popularity of generative AI chatbots like ChatGPT, which can answer many queries directly instead of an internet search.

In response to those pressures, Google earlier this month overhauled its search engine business, replacing the division’s chief after a four-year tenure.

The company also moved its Gemini chatbot team to Google DeepMind, separating it from the research group.

Pichai said Google Search AI Previews, which show a snapshot of information at the top of the results page, was proving successful and available to a billion users in more than 100 countries.

“We’re definitely expanding what’s possible in search and it’s been really encouraging to see users adapt,” Pichai told analysts.

Google Cloud emerged as a standout player between June and September, with revenue up 35% to $11.4 billion, driven by increased adoption of infrastructure and cloud solutions. AI.

This company, behind market leaders Amazon and Microsoft Corp, provides businesses with computing power, data storage and AI tools delivered over the Internet.

The company’s core Google Services segment, which includes search, YouTube and other advertising products, grew 13% to $76.5 billion.

YouTube has reached a major milestone, with total advertising and subscription revenue surpassing $50 billion for the first time over the past four quarters.

Following the release, investors drove Alphabet’s stock price up 5% after hours.

Despite strong profits, Google faces significant legal challenges, at least in the long term.

In August, a US federal judge ruled that Google’s search engine constituted an illegal monopoly, with the US government suggesting a break-up of the company may be appropriate.

Another antitrust lawsuit challenges its dominance over online advertising.

Additionally, Google was ordered to open up Android-powered smartphones to competing app stores following a case brought by Fortnite maker Epic Games Inc, although that move has been put on hold pending resolution. ‘call.

Although these legal battles are expected to take years to resolve, they have raised questions about the company’s long-term strategy and its heavy reliance on search engine advertising revenue.