Google parent Alphabet beat Wall Street estimates for third-quarter revenue on Wednesday, as both its core advertising business and cloud computing unit showed steady growth.
Shares of the company rose 6% in extended trading.
The company reported total revenue of $102.35 billion for the quarter, compared with analysts’ average estimate of $99.89 billion, according to data compiled by LSEG.
The cloud services and AI giant raised its capital expenditure forecast for the year to between $91 billion and $93 billion, compared with the estimates of $80.67 billion.
Google Cloud remained one of Alphabet’s fastest-growing segments, benefiting from surging enterprise demand for AI-powered infrastructure and data analytics services.
The unit posted revenue of $15.16 billion, topping estimates of $14.72 billion. The performance was likely boosted by burgeoning enterprise demand for its AI infrastructure.
The unit continues to close the gap with larger rivals Microsoft Azure and Amazon Web Services, aided by strong take-up of Vertex AI and custom Tensor Processing Units.
Competition in the broader AI and cloud market is intensifying, with rivals aggressively cutting prices and introducing new generative AI capabilities.
Alphabet’s advertising unit, which brings in the vast majority of the company’s revenue, has been competing in a crowded field of rivals vying for more ad dollars as lower interest rates are expected to lift the economy.
However, analysts have pointed to cautious spending from advertisers in some sectors grappling with economic uncertainty due to pressures from tariff costs and a rapidly evolving global trading landscape.
Still, Wall Street expects the company to benefit from advertisers moving away from experimental ad platforms like Snapchat and others.
The results come just days after Microsoft and SoftBank Group-backed OpenAI unveiled “Atlas,” an AI-powered browser aimed at directly competing with Google’s core search engine and browser stack.
The launch represents one of the most significant challenges to Google’s search dominance in years and will be a key focus for investors listening for management’s response to the rising competitive threat to its most lucrative business.
—By Akash Sriram in Bengaluru, Reuters