Alphabet’s September-quarter result comfortably beat expectations, underscoring the company’s broad-based growth and the accelerating contribution from AI-related products. Shares were trading up ~8% after hours.
- Revenue: US$102.35bn, up 16% YoY and ahead of estimates at US$99.6bn.
- Earnings: US$2.87/share versus US$2.33 expected.
- Cash & equivalents: US$98.5bn
Breaking up the composition of the result last night shows how their full-stack approach to AI is delivering, a sentiment the CEO spoke to.
- Google Search: US$56.6bn, up from US$49.4bn last year.
- YouTube Advertising: US$10.3bn, up from US$8.9bn.
- Google Cloud: US$15.2bn, up from US$11.4bn, with a US$155bn backlog of committed contracts.
- Total Advertising: US$74.2bn, up from US$65.9bn.
They lifted FY capital expenditure estimates to $US91-93bn up from about $US85bn – a theme we’ve seen across the tech space of late as they push hard to capture their slice of the AI revolution. This bodes well for the ‘picks and shovels’ operators connected to AI and shows an increased confidence in expenditure getting results.
Overall, another impressive result from one of the “Mag Seven” tech leaders, showing that AI isn’t just hype, it’s beginning to flow through to real revenue growth. Cloud’s reacceleration and continued strength in Search and YouTube reinforce Alphabet’s dominance across both consumer and enterprise ecosystems. We own GOOGL US in the International Equities Portfolio.
MM remains long & bullish GOOGL
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