Alphabet, Google’s parent company, delivered impressive third-quarter 2024 earnings that exceeded Wall Street expectations, with artificial intelligence emerging as a central driver of growth across multiple business segments. The company reported total revenue of $88.27 billion, surpassing the expected $86.44 billion, while earnings per share reached $2.12 versus the anticipated $1.83.
Google Cloud emerged as a standout performer, posting $11.35 billion in revenue with 35% year-over-year growth, significantly beating analyst estimates of $10.79 billion. CEO Sundar Pichai attributed this success to “accelerated growth” in the company’s AI products, stating that AI investments were “paying off.” The cloud division’s AI solutions are driving deeper product adoption with existing customers, attracting new clients, and securing larger enterprise deals.
AI integration is transforming Google’s core operations. The company’s AI Overview feature, which provides AI-generated answers in search results, now reaches over 1 billion users monthly. Pichai revealed that advertisements within AI Overview are “performing well,” demonstrating successful monetization of AI-enhanced search experiences. Perhaps most remarkably, more than 25% of all new code at Google is now generated by AI, then reviewed and approved by engineers—a testament to the company’s internal AI adoption.
YouTube continued its strong performance, with advertising revenue reaching $8.92 billion, slightly above expectations. Total YouTube ads and subscription revenues surpassed $50 billion over the past four quarters for the first time in the platform’s history. Google Advertising overall generated $65.9 billion, meeting analyst projections.
Waymo, Alphabet’s autonomous vehicle division, achieved a significant milestone with 150,000 paid rides weekly, totaling over 1 million fully autonomous miles. Pichai called this “the first time any AV company has reached this kind of mainstream use,” highlighting AI’s practical applications beyond digital services.
The positive results come amid significant regulatory challenges, including a federal ruling that Google violated antitrust law by maintaining an illegal search monopoly. Despite these headwinds, Alphabet’s stock surged more than 5% in after-hours trading, reflecting investor confidence in the company’s AI-driven growth strategy.
Key Quotes
In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals.
CEO Sundar Pichai explained how AI is transforming Google Cloud’s business model, demonstrating that AI capabilities are becoming a key differentiator in enterprise sales and driving the division’s impressive 35% year-over-year growth.
Today, more than a quarter of all new code at Google is generated by AI then reviewed and accepted by engineers.
Pichai revealed this striking statistic about internal AI adoption, showing how AI coding assistants are fundamentally changing software development practices at one of the world’s largest tech companies and potentially foreshadowing industry-wide transformation.
Google’s results this quarter show that it can perform despite serious regulatory threats to its ads business. As competition rises around its core search business, Google’s defense, grounded in AI, is locked in.
Emarketer senior analyst Evelyn Mitchell-Wolf provided external validation of Google’s AI strategy, noting that AI innovation is serving as both a competitive moat and a growth engine even as the company faces unprecedented antitrust challenges.
Waymo has multiple paths to market, and with its sixth generation system, way more significantly reduced unit costs without compromising safety.
Pichai discussed Waymo’s progress in achieving commercial viability for autonomous vehicles, indicating that AI-powered transportation is reaching economic sustainability while maintaining safety standards—a critical milestone for the autonomous vehicle industry.
Our Take
Google’s Q3 results provide compelling evidence that we’re entering AI’s revenue realization phase. The 35% cloud growth driven by AI products isn’t just impressive—it’s transformative, proving enterprises see measurable ROI from AI investments. What’s particularly striking is the breadth of AI monetization: from cloud infrastructure to search advertising to autonomous vehicles. The statistic about AI generating 25% of Google’s code deserves special attention; it suggests we’re witnessing a fundamental shift in how software is created, with AI moving from assistant to co-creator. This could accelerate development cycles industry-wide while raising important questions about developer roles and skills. Meanwhile, Waymo’s milestone demonstrates AI’s capability to deliver physical-world services at scale. The market’s 5% after-hours surge reflects recognition that Google has successfully navigated the transition from AI investment to AI returns, setting a benchmark for the industry.
Why This Matters
This earnings report signals a pivotal moment in the AI industry’s maturation from experimental technology to revenue-generating business driver. Google’s ability to monetize AI across search, cloud services, and advertising demonstrates that enterprise and consumer AI applications are moving beyond hype into sustainable commercial success. The 35% cloud growth rate, powered by AI products, shows that businesses are willing to pay premium prices for AI capabilities, validating the massive infrastructure investments tech giants have made.
The revelation that AI generates 25% of Google’s code represents a watershed moment for software development, suggesting AI coding assistants are becoming indispensable tools rather than experimental novelties. This has profound implications for the tech workforce and productivity gains across the industry. Meanwhile, Waymo’s achievement of 150,000 weekly paid rides proves that AI can deliver real-world services at scale, not just digital products. For the broader AI ecosystem, Google’s success provides a roadmap for monetization and demonstrates that AI investments can deliver tangible returns even amid regulatory scrutiny, potentially encouraging further industry investment and innovation.
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Source: https://www.businessinsider.com/google-third-quarter-earnings-report-q3-2024-2024-10