Reported by The Guardian
Net profit slid 25% from a year earlier to $26.2bn, well short of expectations, though revenue rose to $127.6bn
Shares in Google parent Alphabet fell more than 10% in after-hours trading Wednesday, erasing tens of billions of dollars in stock market value from the $4tn tech giant. The company had reported lower-than-expected profit and a slowdown in its advertising business while it maintained big spending on AI.
Net profit slid 25% from a year earlier to $26.2bn in the July-to-September period, or $2.12 a share, well short of expectations by analysts surveyed by FactSet.
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Alphabet booked an $8.7bn loss on its equity investments, which it attributed to its stake in SpaceX, the Elon Musk-led company where shares have struggled since going public in June.
Revenue, however, rose 25% to an enormous $127.6bn. The figure was slightly below the roughly $128bn analysts had forecast.
Advertising revenue grew 11% to $82bn, short of expectations. Revenue from Google’s search business, still the company’s largest source of income, rose 12% to $63.4bn, slowing from 17% growth in the previous quarter.
YouTube, now the most-watched content provider on American TV screens, saw advertising revenue grow 9% to $11.2bn, down from 13% growth in the previous quarter. YouTube Music and Premium passed 150 million subscribers worldwide, including trials.
Google Cloud, which rents computing power and AI tools to businesses, saw revenue jump 103% to $30.7bn, ahead of analyst expectations.
The company said sales of its in-house AI chips, known as TPUs, contributed significantly to that growth. Operating income for the unit tripled to $11.1bn.
Google is also selling its TPU chips to outside companies, in a growing challenge to market leader Nvidia. OpenAI reportedly plans to buy some of the chips.
Alphabet’s “Other Bets” division, which includes robotaxi company Waymo, posted revenue of $372m and an operating loss of $2bn.
Waymo now provides more than 500,000 paid rides per week across 15 US metropolitan areas and aims to reach 1m weekly rides by the end of the year.
Alphabet spent $51.4bn on capital expenditures during the quarter, mostly on datacenters and AI chips, more than double…