Alphabet, Google’s parent company, reported strong revenue growth on Tuesday, as its business continued to excel despite tough regulatory scrutiny and growing competition.
Alphabet reported $88.3 billion in sales for the third quarter, up 15 percent from a year earlier and above analysts’ estimate of $86.4 billion. Profit climbed 34 percent to $26.3 billion. Analysts had expected $22.9 billion.
The results showed that Alphabet’s popular online services, led by Google’s search engine and YouTube’s video platform, remained central pathways for marketers to get their ads in front of consumers. The company has maintained huge profits in the face of government calls to break up its business and greater competition for advertisers from TikTok, Amazon and others.
The company has pivoted to artificial intelligence, competing with Microsoft and OpenAI for chatbot users, developers and corporate customers. Alphabet continued making large investments in data centers, chips and other hardware in the third quarter, saying it spent $13 billion on capital expenditures, which was a 62 percent jump from a year earlier.
Alphabet’s share price increased more than 3 percent in after-hours trading on Tuesday.
Alphabet has been battling two cases brought by the Justice Department that take aim at its powerful online ads business. In August, a federal judge sided against Google in a landmark ruling, saying the company had acted as an illegal monopoly to maintain its advantage in the search business. The Justice Department said it was considering asking for remedies that include forcing Google to divest its Chrome web browser and Android mobile operating system.
Another ruling, in a case about Google’s technology for advertisers and publishers, is expected in the coming months. Government lawyers have also asked for part of Google’s ad business to be spun off as a possible remedy. Google has denied wrongdoing in both cases.
Next year, Google’s share of the search advertising market is expected to fall below 50 percent, as Amazon and TikTok increase search ad sales, according to eMarketer, a research group that tracks online markets. It would be the first time that Google dipped below the threshold since eMarketer began tracking the metric in 2008.
Nonetheless, Google’s search engine, its largest business, continues to record strong revenue growth. Revenue from the search engine rose 12 percent to $49.4 billion in the third quarter, narrowly higher than analysts’ estimate of $49 billion.
Advertising sales at YouTube climbed 12 percent to $8.9 billion, matching the figure expected by analysts.
Sales at Google Cloud, the division that offers software and technology services to other businesses, increased 35 percent to $11.4 billion. Analysts had estimated $10.9 billion. The unit recorded a record operating profit of $1.95 billion in the third quarter.