Alphabet Inc. reported its third-quarter earnings, with revenues reaching $88.3 billion, a 15% increase from last year.
The Google parent company’s operating margin expanded to 32% from 27.8% year-over-year, while net income rose 34% to $26.3 billion.
During the earnings call, the company highlighted the growing role of AI across its products and services.
Google Cloud revenue increased 35% to $11.4 billion, while YouTube surpassed $50 billion in combined advertising and subscription revenue over the past four quarters.
Several operational changes occurred during the quarter, including the reorganization of Google’s AI teams and the expansion of AI features across its products.
The company also reported improvements in AI infrastructure efficiency and increased deployment of AI-powered search capabilities.
Highlights
AI
CEO Sundar Pichai emphasized how AI transforms the search experience, telling investors that “new AI features are expanding what people can search for and how they search for it.”
Google’s AI infrastructure investments are yielding efficiency gains. According to Pichai, over a quarter of all new code at Google is now generated by AI and then reviewed by engineers, accelerating development cycles.
Google has reduced AI Overview query costs by 90% over 18 months while doubling the Gemini model size. These improvements extend across seven Google products, each serving over 2 billion monthly users.
Cloud
The Google Cloud division reported operating income of $1.95 billion, marking an increase from $266 million in the same quarter last year.
Company leadership attributed this growth to increased adoption of AI infrastructure and generative AI solutions among enterprise customers.