Alphabet's quarterly revenue topped $100 billion for the first time Shares up 6%

Google's holding company Alphabet exceeded analysts' expectations for revenue and profit in the third quarter, with sales exceeding $100 billion for the first time. Revenue growth was shown by all key areas of Alphabet's business, including advertising tools and cloud services. At the same time, the company raised its capital expenditure forecast for Google Cloud expansion for the second time this year.

Alphabet's revenue for the third quarter of fiscal 2025 totaled a record $102.35 billion, showing a 16% year-on-year increase. Analysts surveyed by LSEG had expected only $99.89 billion, CNBC reported.

Earnings per share (EPS) amounted to $2.87, while Wall Street on average expected only $2.12, MarketWatch wrote, citing FactSet. Alphabet's net income rose 33% year-on-year to $34.98 billion. In September, the company was fined $3.45 billion by the European Commission for anti-competitive practices in its advertising business, which affected net income, CNBC noted.

Alphabet also announced an increase in projected capital expenditures for 2025. "Given the growth of our business and demand from cloud customers, we expect capital expenditures in 2025 to be in the range of $91 billion to $93 billion," Alphabet said in the report. Earlier in 2025, Alphabet has already raised its spending forecast from $75 billion to $85 billion. The bulk of this money is allocated to the development of technical infrastructure - primarily data centers, writes CNBC.

Alphabet Class A and C shares rose by more than 6% in extended trading on October 29 after the release of quarterly results. The main trades ended up 2.65% and 2.51%, respectively: during the day, the securities set a new record value.

Alphabet's cloud services revenue (Google Cloud business) totaled $15.15 billion in the third quarter, up 33% from the same period last year. Analysts had forecast revenue of $14.74 billion, according to StreetAccount data cited by CNBC. Meanwhile, Microsoft's cloud business grew 40% in the same quarter.

Google Cloud division made a profit of $3.59 billion, while analysts expected an operating profit of $3 billion, Bloomberg noted. This segment is considered Alphabet's most dynamic source of growth and the most visible indicator of how the artificial intelligence boom is boosting the company's sales, the agency noted.

Google's latest financial results reflect growing demand for artificial intelligence services centered in its Google Cloud division, CNBC notes. The company is also increasing spending on infrastructure expansion to serve the accumulated customer demand. Google's cloud division has been signing big contracts with AI startups, including a massive multi-billion dollar agreement to supply custom AI chips to Anthropic, the developer of chatbot Claud. However, this segment is still behind Amazon Web Services and Microsoft Azure in terms of business volume, so its growth is expected to be more rapid, Bloomberg writes.

"We continue to deliver strong growth in new business lines. Google Cloud accelerated [growth], ending the quarter with an order book of $155 billion," CEO Sundar Pichai said, as quoted in the filing.

In addition to cloud services, the company's other key businesses - Google Search & Other, YouTube ads, subscriptions and Google devices - posted double-digit growth rates, Alphabet said in the report.

Thus, Google's search business brought the company $56.56 billion, which is 15% more than a year earlier. Analysts expected $55 billion, Bloomberg writes. The division has so far successfully withstood the increasing competition from AI chatbots, the agency notes.

YouTube's advertising revenue totaled $10.26 billion, while Wall Street predicted $10.01 billion, according to StreetAccount.

Alphabet's total advertising revenue grew 12.6%, reaching $74.18 billion.

Only the revenue of the Other Bets division, which includes biotech company Verily and Waymo, a developer of unmanned cabs, fell 11.3% to $344 million. The division's loss amounted to $1.42 billion compared to $1.12 billion in the same period last year. Analysts had forecast a loss of $1.2 billion.

Alphabet's Class A shares have 75 ratings from analysts and the majority advise buying the stock: 53 Buy ratings and 10 Overweight, MarketWatch shows. The remaining 12 analysts recommend holding the stock (Hold). That said, the average target price of $265.57 is lower than the current price - even excluding the more than 6% surge in the Oct. 29 postmarket.

This article was AI-translated and verified by a human editor