Net profit slid ۲۵% from a year earlier to $۲۶.۲bn, well short of expectations, though revenue rose to $۱۲۷.۶bn
Net profit slid ۲۵% from a year earlier to $۲۶.۲bn in the July-to-September period, or $۲.۱۲ a share, well short of expectations by analysts surveyed by FactSet.
Alphabet booked an $۸.۷bn loss on its equity investments, which it attributed to its stake in SpaceX, the Elon Musk-led company where shares have struggled since going public in June.
Revenue, however, rose ۲۵% to an enormous $۱۲۷.۶bn. The figure was slightly below the roughly $۱۲۸bn analysts had forecast.
Advertising revenue grew ۱۱% to $۸۲bn, short of expectations. Revenue from Google’s search business, still the company’s largest source of income, rose ۱۲% to $۶۳.۴bn, slowing from ۱۷% growth in the previous quarter.
YouTube, now the most-watched content provider on American TV screens, saw advertising revenue grow ۹% to $۱۱.۲bn, down from ۱۳% growth in the previous quarter. YouTube Music and Premium passed ۱۵۰ million subscribers worldwide, including trials.
Google Cloud, which rents computing power and AI tools to businesses, saw revenue jump ۱۰۳% to $۳۰.۷bn, ahead of analyst expectations.
The company said sales of its in-house AI chips, known as TPUs, contributed significantly to that growth. Operating income for the unit tripled to $۱۱.۱bn.
Google is also selling its TPU chips to outside companies, in a growing challenge to market leader Nvidia. OpenAI reportedly plans to buy some of the chips.
Alphabet’s “Other Bets” division, which includes robotaxi company Waymo, posted revenue of $۳۷۲m and an operating loss of $۲bn.
Waymo now provides more than ۵۰۰,۰۰۰ paid rides per week across ۱۵ US metropolitan areas and aims to reach ۱m weekly rides by the end of the year.
Alphabet spent $۵۱.۴bn on capital expenditures during the quarter, mostly on datacenters and AI chips, more than double the $۲۴bn a year earlier.
Its latest forecast for capex spending is between $۱۹۵bn to $۲۰۵bn in spending for ۲۰۲۶.
The company said it would continue to increase capex spending significantly in ۲۰۲۷.
“I would broadly think of all of this as a long-range planning process, not a short-term allocation exercise,” Sundar Pichai, the Google CEO, told analysts of the company’s investment splurge.
The company’s spending, which included a fine paid to the European Union, outstripped the cash generated by Alphabet’s businesses for a second straight quarter, leaving a $۹.۱bn gap.
During the quarter Alphabet raised $۲۸.۷bn by selling bonds and $۱۲.۴bn by issuing new shares to help pay for its AI ambitions.
Google has stepped up the pace of its AI releases since a delay to a flagship model in July raised questions about whether it was falling behind rivals OpenAI and Anthropic.
It launched Gemini ۴ at the end of September and later released a version focused on cybersecurity.
The Gemini app has reached ۱bn users. Google’s AI models now process nearly ۳۲bn tokens, or units of text, per minute, more than four times the level of a year ago, the company said.
Anthropic, the maker of the Claude chatbot, is also one of Google’s largest cloud customers. It has committed to using up to one million Google AI chips.
In September, a US judge declined to order Google to sell off parts of its advertising technology business, imposing restrictions on how it operates instead.
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