Google parent Alphabet profit grows on ads and cloud

SAN FRANCISCO — Google parent Alphabet on Tuesday reported profits that beat market forecasts as digital advertising revenue revived and its cloud business grew.

The Internet giant reported net income of $18.7 billion on revenue of $74.6 billion in the recently ended quarter.

"There's exciting momentum across our products and the company, which drove strong results this quarter," Alphabet chief executive Sundar Pichai said in an earnings release.

Alphabet shares jumped more than six per cent to $129.88 in after-market trades following the results.

While the latest talk has surrounded artificial intelligence (AI), what matters most for Google earnings currently is digital advertising — where it gets the bulk of its revenue.

The company said that advertising revenue hit $58.1 billion, which outshined market expectations of $57.45 billion set by analysts.

Google is also a player in the cloud computing industry, where revenue came in at $8 billion, compared with $6.3 billion the unit took in during the same period a year earlier.

"Our continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search, and improving all our services," Pichai said.

Google has played a close second to the partnership between Microsoft and OpenAI in rolling out its AI products following the release of ChatGPT that ignited a tech frenzy.

The company has largely been seen as playing catch up with Microsoft, with questions over whether the mighty Google search engine will withstand developments in AI.

Microsoft was quick to beef up its Bing search engine with AI powers, but Google's search has yet to see a real threat to its dominance — which remains at about 90 per cent of the market worldwide.

Google, like most big tech companies, has seen its share price rise steeply in 2023 as investors expect AI to generate new revenue and open new markets.

According to the Wall Street Journal, Google co-founder Sergey Brin is back at the company headquarters in California helping teams develop even more AI products.

He and co-founder Larry Page stepped down from active roles at Google in 2019 when Pichai was chosen to replace them as chief executive.