Alphabet Inc. (GOOGL) reported third-quarter earnings that far surpassed Wall Street expectations, with earnings per share hitting $2.87, well above the consensus estimate of $2.26. Revenue for the quarter reached $102.3 billion, exceeding forecasts of $99.9 billion and marking a 16% increase from the same period last year.
Google Cloud was a standout performer, with revenue jumping 34% to $15.2 billion, beating analyst projections of $14.8 billion. The segment's backlog of future revenue commitments grew to $155 billion, and CEO Sundar Pichai highlighted that the company signed more deals worth over $1 billion in Q3 alone than in the previous two years combined. AI played a crucial role, generating billions in revenue for Google Cloud, supported by major partnerships with OpenAI, Meta, and Anthropic.
Alphabet raised its 2025 capital expenditure guidance to $92 billion from $85 billion, focusing on AI infrastructure investments. Operating margin was 30.5% for the quarter, or 33.9% excluding a $3.5 billion European Commission fine. Google Cloud's operating profit margins improved to 24% from 17% last year.
Despite competition from AI tools like OpenAI's ChatGPT Atlas, Alphabet's Search business remained robust, with revenue of $56.6 billion outpacing the $55 billion forecast. The company's stock climbed 6% in after-hours trading following the announcement, reflecting investor optimism.
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