Google’s owner Alphabet smashes expectations for revenue and profit

Google’s owner Alphabet smashed expectations in its third quarter results, chalking up its third straight quarter of record profit and $65.5bn in revenues against Wall Street estimates of $63.3bn.

The tech giant banked a $18.9bn net profit – or earnings per share of $27.99, up from $11.2bn for the same period last year.

“Our consistent investments to support long-term growth are reflected in strong financial performance, with revenues of $65.1 billion in the quarter,” said Ruth Porat, Alphabet and Google’s chief operating officer.

“We continued to deliver across our business by providing helpful and valuable experiences for both consumers and our partners.”

The main drivers of such massive growth were the company’s iconic search tool – which increased to $37.9bn – and Youtube ads – which soared to $7.2bn.

Commenting on the results, Anthony Denier – chief executive at trading platform Webull, told City A.M.: “Google saw huge growth on top-line growth, with a more than 40 per cent jump year over year.

“Earnings per share jumped 71 per cent year over year to $27.99, far surpassing Wall Street’s forecast of $23.48. Since Google is the fifth-largest stock in the S&P 500, this should help push the index higher tomorrow.”

Alphabet recorded excellent results also compared with the previous quarter, when it registered $61.8bn in revenues – a 62 per cent increase compared to the same time last year.

The company’s chief executive Sundar Pichai commented on today’s results saying: “Five years ago, I laid out our vision to become an AI-first company. This quarter’s results show how our investments there are enabling us to build more helpful products for people and our partners.

“Ongoing improvements to Search, and the new Pixel 6, are great examples.”

City A.M. reported earlier this month the Alphabet’s AI department Deepmind had turned profits for the first time, with turnover soaring to £868m.

Given the outstanding outcomes, analyst are wondering about the company’s free cash.

“Another quarter of stellar growth and even stronger margins mean Alphabet is now generating free cash of $18.7bn every three months,” commented Nicholas Hyett, equity analyst at Hargreaves Lansdown.

“That means that even after all its current investments, which range from driverless cars to biotech, the group would need to spend an extra $6bn+ a month just to break even. There simply aren’t enough profitable projects in which the group can invest its embarrassment of riches.

“That’s certainly a nice problem to have, but it does leave us wondering what it intends to do with the nearly $130bn of cash it has lying around. Buying back $12bn of stock a quarter has barely put a dent in it.”