Alphabet Inc. delivered a blowout third-quarter report, sending shares up 8% in premarket trading after the company smashed earnings and revenue expectations. The Google parent reported earnings per share of $2.87, easily topping Wall Street’s estimate of $2.26 and rising sharply from $2.12 a year earlier.
Revenue soared 16% year over year to $102.3 billion, marking the first time in company history that Alphabet crossed the $100 billion mark in a single quarter. Analysts called it a defining moment for the search and cloud giant, crediting strong performance across its core units – Google Search, YouTube, and Google Cloud.
AI and Cloud Lead the Growth Story
Alphabet’s results were driven by rapid expansion in Google Cloud, which posted a 34% jump in sales year over year. The unit’s operating margin rose to 24% from 17% a year ago, underscoring how scale and disciplined cost management are beginning to pay off.
The company also raised its 2025 AI data-center spending forecast to $92 billion, up from a prior estimate of $85 billion. Executives said the investment will help meet accelerating demand for AI infrastructure, reflecting the firm’s determination to stay ahead of competitors like Amazon and Microsoft in the race to power next-generation AI applications.
Profitability, Penalties, and Market Reaction
Alphabet’s operating margin came in at 30.5%, slightly below expectations and down from 32.3% last year, largely due to a $3.5 billion European Commission fine. Excluding that charge, margins would have reached 33.9%, signaling that profitability remains strong despite heavy AI spending.
Analysts largely dismissed the impact of the fine, noting that Alphabet’s diversified revenue base continues to deliver consistent growth. They pointed to expanding AI monetization in Search, resilient ad performance on YouTube, and cloud profitability as reasons for renewed investor confidence.
With shares up 8% following the report, market sentiment suggests investors are encouraged by Alphabet’s ability to grow aggressively while maintaining solid margins. Key metrics to watch include cloud-unit margins, ad revenue momentum, and the company’s execution of its expanded AI infrastructure strategy.
As previously covered, Alphabet’s transformation from a search-driven company into a global AI-cloud powerhouse is well underway – and this record-breaking quarter marks another milestone in that evolution.
