Alphabet Inc. Reports Historic Revenue Milestone Amid Legal Scrutiny
SAN FRANCISCO — On Wednesday, Alphabet Inc., the corporate parent of Google, proclaimed a historic achievement by surpassing $100 billion in quarterly revenue for the first time ever. This remarkable feat underscores the resilience of its sprawling internet empire, even in the face of legal and competitive challenges.
This surge in revenue and profit follows a recent court decision regarding the U.S. Justice Department’s notable antitrust case against Google’s preeminent search engine, which has been interpreted as a mild rebuke, lacking the heft to significantly constrain the company’s operations.
In the July to September timeframe, Alphabet exhibited formidable prowess, generating nearly $35 billion in profit, translating to $2.87 per share—a striking 33% increase compared to the same quarter last year.
Revenue soared by 16% year-over-year, reaching an impressive $102.3 billion, significantly outpacing analysts’ expectations that influence market dynamics.
Investor enthusiasm was palpable as Alphabet’s stock surged nearly 5% during after-hours trading following the announcement of its third-quarter results.
This uptick follows a substantial 30% increase in Alphabet’s shares, contributing to an astounding $770 billion in shareholder wealth accumulation since early September.
This growth coincides with U.S. District Judge Amit Mehta’s rejection of a proposal from the Justice Department to dismantle Google in an effort to counter the monopolistic practices of its search engine, which had been declared illegal last year.
Judge Mehta’s cautious stance on Google’s search monopoly reflects a recognition that rapid advancements in artificial intelligence (AI) have birthed innovative “answer engines” from emerging tech rivals such as ChatGPT and Perplexity, providing consumers with alternative choices.
Both OpenAI, the creator of ChatGPT, and Perplexity have developed AI-driven web browsers to rival Google’s dominant Chrome, which the Justice Department sought to have sold off in an unsuccessful bid for reform.
In response to competitive pressures, Google has proactively integrated AI features into both its search engine and Chrome, as well as other offerings, reinforcing its market position while venturing into new technological realms.
Recently, CEO Sundar Pichai announced that Google’s AI-powered Gemini app has garnered 650 million monthly users, indicating the success of these initiatives.
Like many major tech firms, Google is heavily investing in its AI aspirations, yet this has sparked concerns over a potential bubble that could burst.
Alphabet now anticipates capital expenditures in the range of $91 billion to $93 billion for the year, an increase from $85 billion projected in July, with a significant portion allocated for the expansive data centers crucial to powering AI technologies.
Alphabet benefits immensely from a lucrative advertising network that Google has meticulously developed over a quarter-century. In the third quarter, Google’s ad sales reached $74.2 billion, a 13% rise from the previous year.
The AI movement has also significantly benefited Google’s Cloud division, which manages data centers for various enterprises, making it the fastest-growing segment of Alphabet. Google Cloud reported revenue of $15.2 billion in the last quarter, marking a 34% growth from the prior year.
While Google appears to be navigating its current legal controversies associated with its search engine effectively, it still faces potential repercussions from another case brought forth by the Justice Department, which scrutinizes the technology underlying its advertising network.
Earlier this year, U.S. District Judge Leonie Brinkema criticized segments of Google’s ad technology as constituting an illegal monopoly. She is now deliberating on modalities to impose constraints on the company going forward.
The Justice Department seeks judicial intervention to compel Google to divest elements of its ad network—an outcome that Brinkema is not expected to rule on until early next year.
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