SAN FRANCISCO (AP) — Google continues to thrive as the company makes a crucial shift toward artificial intelligence and battles regulators trying to topple its Internet empire.
The latest evidence of Google’s prosperity emerged Tuesday with the release of parent company Alphabet Inc.’s results. for the period July-September. Both Alphabet’s profits and revenue rose faster than industry analysts expected, thanks largely to a money machine powered by Google’s ubiquitous search engine.
Alphabet earned $26.3 billion, or $2.12 per share, last quarter, up 34% from a year ago. Revenue rose 15% from the same time last year to $88.27 billion.
“Our commitment to innovation and long-term focus and investments in AI are paying off,” Alphabet CEO Sundar Pichai said during a call discussing the results.
Profits would have been even higher had Google not poured so much money into building its AI arsenal in a technology arms race that also includes other industry heavyweights Microsoft, Amazon, Apple, Facebook parent Meta Platforms and rising star OpenAI . The AI investments are the main reason why Google’s capital expenditures rose 62% last quarter from the same time last year to $13.1 billion.
According to Anat Ashkenazi, Alphabet’s Chief Financial Officer, AI spending is likely to remain at about the same level during the current October-December period, with the increase next year being even greater. But Ashkenazi also emphasized that the Mountain View, California-based company will leverage cost-saving opportunities in other areas to help boost profits. Alphabet has already reduced its payroll from more than 190,000 employees worldwide at the beginning of last year to about 181,000 employees now.
In an example of how AI can perform tasks that once required human brainpower, Pichai said the technology now writes more than 25% of the company’s new computer coding.
Investors seemed pleased with both the performance and what they heard from company leaders. Alphabet’s share price rose 5% in extended trading after the numbers came out and the conference call concluded.
Investing.com analyst Thomas Monteiro said Alphabet’s results make it likely that more good news for Big Tech will come this week, while quarterly reports from Microsoft, Meta, Amazon and Apple are expected in the coming days. to appear.
But a four-year-old antitrust lawsuit brought by the U.S. Department of Justice has cast a cloud of uncertainty over Google’s future.
After weighing the evidence presented at the hearing a high-profile trial last yeara federal judge declared that Google’s search engine is an illegal monopoly – a decision that has opened the door for a major upheaval. Earlier this month, the Justice Department suggested as much could try to break up Google as part of the sentences to be determined next summer by U.S. District Judge Amit Mehta.
In addition to the legal attack on its search engine, Google has also been ordered to break down the barriers that protect the Play Store for Android smartphone apps. That ruling came earlier this month after a jury decided that operation was also an illegal monopoly. Google is also nearing the end of a new antitrust lawsuit in Virginia centering on the technology underlying its digital advertising network.
As if the regulatory issues weren’t enough, Google is also in the midst of a major makeover of its search engine, with increasing emphasis on key results produced by artificial intelligence in response to competitive threats to alternative options that depend on the same potential. revolutionary technology.
For now, at least, Google remains a juggernaut.
Digital advertising linked to Google’s search engine remained the financial cornerstone. Revenue from that segment rose 12% from a year ago to $49.39 billion. And Google’s cloud division is growing at an even more robust pace, thanks to demand for AI services. The cloud division generated revenue of $11.35 billion last quarter, an increase of 35% compared to last year.
But the regulatory questions dogging Google remain a concern among investors. Although Alphabet’s shares are up more than 20% so far this year, Tuesday’s closing price of $169.68 remains well below the high of nearly $192 reached in July before the ruling on the search engine monopoly.
