Google parent company Alphabet Inc. came up short of Wall Street expectations despite strong revenue growth in its third-quarter results, which sent its stock falling in after-hours trading Wednesday.
The Mountain View, California-based company said its net income was USD 26.17 billion in the July-September period. That’s down from USD 34.98 billion in the same period a year earlier.
Revenue grew 25 per cent from the same period last year to USD 127.58 billion, but that was shy of analysts’ expectations. Analysts, on average, were expecting revenue of USD 127.97 billion, according to a poll by FactSet.
The company earned USD 2.12 per share. Results were impacted by a USD 8.7 billion loss on equity investments in the quarter. It was not immediately clear if the reported earnings per share were comparable to analyst estimates, which were around USD 3.01 per share.
Sundar Pichai, CEO of Google and Alphabet, said in a statement that the quarter was strong and that the company is “now on a half-trillion dollar revenue run rate. Our deep full stack approach is driving momentum across the business,” he said, pointing to the 25 per cent revenue growth year-over-year.
Google Cloud revenue jumps 103%
Despite the earnings disappointment, Alphabet reported strong growth in its cloud business, supported by rising demand for artificial intelligence infrastructure and solutions.
According to Pichai’s remarks during the company’s third-quarter earnings call, Google Cloud revenue surged 103 per cent year-over-year.
Pichai said AI infrastructure and solutions were the major drivers of cloud growth, adding that the company was working to expand capacity to meet long-term demand.
He also highlighted strong demand for Google’s Tensor Processing Unit (TPU) systems across a wide range of customers.
Google Search records strongest query growth in five years
Google’s core search business continued to show momentum, with AI investments contributing to increased usage and overall query growth.
According to Pichai, the year-over-year growth rate in search queries reached its highest level in five years. Search revenue increased 12 per cent year-over-year during the quarter.
The company also reported growing adoption of AI-powered search features. Queries in AI Mode were, on average, three times longer than traditional searches, while one in five AI Mode searches globally involved voice, images or documents.
Google also crossed 50 billion visual searches per month.
Gemini app reaches one billion users
Pichai also said the Gemini app, Google’s artificial intelligence assistant, has reached one billion users, making it the fastest-growing product in Google’s history.
The company reported a sharp increase in demand for its AI models, with its first-party model APIs processing nearly 32 billion tokens per minute. This represented a 40 per cent increase from the previous quarter and more than four times the volume recorded a year earlier.
Google also highlighted progress in its Gemini 4 model series, including Argon and the newly announced Carbon model, as it continues to expand its AI capabilities.
YouTube subscribers cross 150 million
Alphabet also reported growth in its subscription business, with YouTube Music and Premium surpassing 150 million subscribers globally, including trial users.
Meanwhile, its autonomous driving business, Waymo, has completed more than 300 million fully autonomous miles and is operating in 15 major US cities, according to Pichai.
The company is also planning international expansions into Canada, Germany, Singapore and Spain.
Alphabet shares fall 9% after earnings
Despite strong growth across Google Cloud, Search and AI products, Alphabet’s shares fell about 9 per cent to USD 295.20 within an hour after the market closed.