Alphabet's Google Cloud unit delivered third quarter revenue of $8.4 billion, up 22% from a year ago, with an operating profit of $266 million.
Wall Street was expecting Google Cloud to report revenue of $8.64 billion.
Alphabet's reported third quarter earnings of $19.69 billion, or $1.55 a share, on revenue of $76.7 billion, up 11% from a year ago.
Wall Street was expecting third quarter earnings of $1.45 a share on revenue of $76.69 billion.
Also see: Google Cloud Next everything announced: Infusing generative AI everywhere
Google CEO Sundar Pichai said the company is innovating across its portfolio. Ruth Porat, President, Chief Investment Officer and CFO, said the company was seeing "momentum in Cloud."
On a conference call, Porat said:
"We are pleased with the ongoing customer engagement with GCP and Workspace and the potential benefit of our AI solutions including infrastructure and services such as Vertex AI and Duet. We continue to invest aggressively given the significant potential we see while remaining focused on profitable growth. In terms of expenses and profitability, we're pleased with our operating performance. As we have repeatedly stressed, we remain focused on durably reengineering our cost base to create investment capacity to support our growth priorities, most important of which is with AI."
Pichai said that Google Cloud continued to see cusotmers optimize spending, but the pipeline of AI projects is growing. He said:
"We had definitely started seeing customers looking to optimize spend. We leaned into it to help customers given some of the challenges they were facing. And so that was a factor. But we are definitely seeing a lot of interest in AI. There are many, many projects underway now, just on Vertex alone, the number of projects grew over 7x. And so we see signs of stabilization, and I'm optimistic about what's ahead."
Other items include:
- YouTube ad revenue was $7.95 billion, up from $7 billion a year ago.
- Search revenue surged to $44 billion, up from $39.54 billion a year ago.
- Alphabet ended the quarter with 182,381 employees, down from 186,799 a year ago.
- US revenue was up 9% from a year ago with EMEA and APAC up 17% and 14%, respectively.
