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  • Google parent Alphabet posts 15% rise in revenue as CEO says AI investments ‘pay off’

    Google parent Alphabet posts 15% rise in revenue as CEO says AI investments ‘pay off’

    Google parent Alphabet topped third-quarter earnings and revenue on Tuesday, helped by a 35% AI-driven increase in its cloud business, as well as a rise in its digital advertising revenue.

    Alphabet shares, which closed up 1.8% on Tuesday, rose 4.4% in after-hours trading. Shares are up nearly 22% this year, in line with the broader market.

    CEO Sundar Pichai said AI investments were “paying off” through usage and sales in its Search and Cloud businesses.

    CEO Sundar Pichai said investments in AI were “paying off.” AFP via Getty Images

    Perceived as slow to catch up with Big Tech rival Microsoft in the AI ​​race, Google has improved its Gemini AI chatbot and made more improvements to its AI search offering. The company is continuing to spend heavily on AI.

    Its new chief financial officer, Anat Ashkenazi, making her first call with analysts, said Alphabet’s capital spending in 2025 would be higher than this year.

    In the third quarter, Alphabet’s equity rose 62% to $13 billion. The fourth quarter is expected to be similar, she said.

    Revenue from Google’s cloud platform rose to $11.35 billion, beating analysts’ estimate of $10.86 billion.

    It was the fastest pace of growth in eight quarters, thanks to enterprises doubling their cloud spending, which is key to powering artificial intelligence technologies.

    “I think it was an impressive quarter because the fact that Google Cloud was able to more than offset the decline in Search speaks to both the growing importance of cloud revenue and the fact that the company continues to diversify its revenue base, ” said Bob O’Donnell. president of TECHnalysis Research.

    Revenue rose 15% to $88.27 billion, beating analysts’ estimates. AP

    Google has rolled out AI Summaries ads, which use generative AI to aggregate content from a variety of sources and display concise results for search queries.

    Analysts said users find the company’s new AI tools more effective than before — a significant improvement from earlier this year when the feature drew heavy criticism for showing incorrect answers, including a pizza recipe that listed glue as an ingredient.

    According to LSEG, Alphabet beat earnings expectations with earnings of $2.12 per share, compared to an average market estimate of $1.85.

    In the third quarter, Alphabet’s capital spending rose 62% to $13 billion. The fourth quarter is expected to be similar. Getty Images

    Digital ad sales — the largest share of Alphabet’s total revenue — rose to $65.85 billion from $59.65 billion. That includes YouTube ad sales that rose 12% to $8.92 billion but slowed from the second quarter.

    Google’s dominant position in the digital ad market has helped attract marketing dollars, even as TikTok and Amazon make inroads with marketers. Quarterly results also got a boost from increased political spending ahead of the presidential election and the 2024 Paris Olympics that ended in August.

    Social media company Snap, which also depends on advertising, posted good news for shareholders, topping Wall Street’s targets for quarterly revenue and user growth, sending shares up 6% in after-hours trading. of work.

    Alphabet’s total revenue rose 15% to $88.27 billion in the July-September period, while analysts on average were expecting $86.30 billion, according to LSEG data.

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    Image Source : nypost.com

  • Meta warns of ‘significant acceleration’ in AI-related costs after strong third quarter

    Meta warns of ‘significant acceleration’ in AI-related costs after strong third quarter

    Facebook owner Meta Platforms beat analysts’ estimates for third-quarter revenue and profit on Wednesday, but warned of “significant acceleration” in artificial intelligence-related infrastructure spending.

    The results sent mixed signals to investors about whether digital ad sales from Meta’s core social media business would continue to cover the cost of its massive AI build.

    Shares of the Menlo Park, California-based firm fell 2.9% in after-hours trading.

    Facebook parent Meta warned of “significant acceleration” in infrastructure spending related to its AI build. Above, CEO Mark Zuckerberg wearing Orion AR glasses. Reuters

    “Meta needs to prove it can continue to cover its AI costs as they rise next year, and any weakness in its core advertising business could make investors nervous as they continue to wait for a return on higher bets Meta’s AI giants,” said the director of Emarketer. analyst Jasmine Enberg.

    Like its Big Tech peers, Meta has invested heavily in data centers to take advantage of the generative AI boom. Unlike cloud service providers, however, it does not expect to monetize these investments immediately and is therefore subject to more scrutiny from investors about its spending.

    The world’s largest social media company, led by CEO Mark Zuckerberg, kept costs under control in the third quarter, with total expenses of $23.2 billion and capital expenditures of $9.2 billion. He projected a slightly improved spending picture for the year as well, narrowing the total spending forecast to $96 billion to $98 billion.

    In its press release, however, it warned of “a significant acceleration in infrastructure spending growth next year as we recognize higher growth in depreciation and operating expenses of our expanding infrastructure fleet.”

    Investors have been wary of Meta’s spending in recent months. Its shares sank in April after it revealed a higher-than-expected spending forecast, knocking $200 billion off its stock market value.

    That capped a string of strong quarters for Meta, which has bounced back from a share price slump in 2022 by trimming its workforce, building on investor enthusiasm for AI and earlier this year issuing a dividend of her first ever.

    Advertising accounts for the vast majority of Meta’s revenue, meaning higher marketing spend during the holiday season could provide a crucial boost to the company’s bottom line. AP

    Meta’s earnings follow encouraging results from digital ad companies Alphabet and Snap, both of which beat third-quarter revenue estimates on Tuesday thanks in part to growth in AI-assisted ad sales.

    Meta reported third-quarter earnings of $6.03 per share, compared with estimates of $5.25 per share, according to data compiled by LSEG. Third-quarter revenue came in at $40.59 billion, compared with analysts’ estimates of $40.29 billion.

    The company also forecast fourth-quarter revenue of between $45 billion and $48 billion, compared with analysts’ estimates of $46.31 billion, according to data from LSEG.

    According to analysts, advertising accounts for the vast majority of Meta’s revenue, meaning higher marketing spending during the holiday season could provide a crucial boost to the company’s bottom line.

    Meta’s earnings follow encouraging results from digital ad companies Alphabet and Snap, both of which beat third-quarter revenue estimates on Tuesday thanks in part to growth in AI-assisted ad sales. Reuters

    Meta’s daily active people (DAP), a metric it uses to track unique users who open one of its apps in a day, rose 5% in the third quarter to 3.29 billion. DAP increased by 7% in the previous June quarter, to ALL 3.27 billion.

    Meta is well-positioned to squeeze more revenue from users as user growth slows, given its AI tools to show people more content that matches their interests, Enberg said.

    The company’s Reality Labs division, which makes the Quest virtual reality headset, EssilorLuxottica’s Ray-Ban smart glasses and upcoming augmented reality glasses, lost $4.4 billion in the third quarter, narrower than analysts’ estimates. for a loss of 4.7 billion dollars.

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    Image Source : nypost.com