Alphabet posts 15% revenue increase for Q3

Google parent company Alphabet is promising more to come in AI-powered advertising, on the heels of higher-than-expected revenue in its latest earnings report. 

Alphabet posted its latest earnings on Tuesday, reporting earnings per share of $2.12 and revenue of $88.27 billion during Q3 2024. It beat London Stock Exchange analyst estimates, thanks to strength of its search, advertising and growing Cloud revenue. 

Ad revenue for the quarter came in at $65.85 billion, up about 10.4% year over year. 

YouTube ad revenue also exceeded analyst expectations, bringing in $8.92 billion versus the $8.89 billion StreetAccount estimate. For the first time, YouTube’s total ad and subscription revenue totaled above $50 billion over the last four quarters. 

“Our commitment to innovation, as well as our long-term focus and investment in AI, are paying off with consumers and partners benefiting from our AI tools,” Alphabet CEO Sundar Pichai said in a press release. 

On a call with analysts, the company detailed more on how AI is evolving its capabilities. While Pichai acknowledged a learning curve for users, he said AI is increasing usage of its products. For example, more people are using AI search and asking more complex and different types of queries.

The company has added ads to its AI overviews, including recently on mobile, and sees more monetisation opportunities there. 

Alphabet is also adding its AI large language model Gemini into its ad capabilities, including through its Performance Max and Demand Gen products. This has helped advertisers scale and make different creative assets with the help of AI. 

However, executives acknowledged the changes in technology will lead to a restructuring of its business. 

Earlier this month, it was announced Google search and ads boss Prabhakar Raghavan would move to the role of chief technologist. He will be replaced with Nick Fox, who was until recently VP for product and design for Google Search and Assistant.