Double-digit growth for Alphabet for the first time since 2022: revenue of $76.7 billion in the third quarter

Global Courant

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Google owner Alphabet reported Tuesday evening a pre-tax profit of $21.2 billion on revenue of $76.7 billion in the third quarter. This equates to annual revenue growth of eleven percent and marks the first time since 2022 that the tech giant has posted double-digit growth on the top line.

It had previously expected pretax profit of $21.9 billion and revenue of $75.5 billion, according to Bloomberg estimates.

In a press release, CEO Sundar Pichai highlighted the progress the company has made with its artificial intelligence products and promised that there is much more to come.

– The fundamental strength of our business was clearly visible in the quarter, driven by significant growth for search engines and YouTube, as well as good velocity for cloud services, says CFO Ruth Porat.

Heaven boom

Despite returning to double-digit revenue growth, Alphabet shares fell more than five percent in after-hours trading on Wall Street. According to Bloomberg, the decline can be attributed to weaker revenues and results for Google Cloud, which is considered the next growth rocket for the tech giant.

A turnover of $8.6 billion and an operating profit of $433 million were expected in advance. The result was revenue of $8.4 billion and operating income of $266 million.

The Google owner is the third largest player in cloud services, after Amazon and Microsoft.

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As a result of the large-scale downsizing processes the company announced earlier this year, costs to date are $2.1 billion. Costs related to canceled leases so far this year also amount to $649 million.

“We may need to book additional costs in the future as we assess our housing needs,” the message reads, referring to an “optimization of the company’s office properties worldwide.”

AI-driven

Along with the six other US tech giants, Alphabet has consolidated its dominant position in the global stock market so far in 2023. Google’s owner company has risen more than 50 percent on the stock market this year and, together with Tesla, Microsoft, Meta, Apple, Nvidia and Amazon, has single-handedly ensured that the MSCI All-Country index is positive this year.

The group, nicknamed the ‘magnificent 7’, has also kept the S&P 500 index on Wall Street afloat for much of the year. In the marketplace, artificial intelligence has been a central part of the story. All seven of them have jumped into the ‘AI arms race’ that has been the big talk of the stock market in recent months – and with which investors have rewarded the giants in the form of strong share price increases.

After what must be called a successful launch of OpenAI’s ChatGPT last year, Alphabet has started integrating the use of generative artificial intelligence into its products, including in the search engine and in other parts of the business.

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The price increases have also helped U.S. companies now make up 61 percent of the world index, and 2023 is likely to be the eighth year in the last decade in which U.S. companies’ share of global market value increases, the paper said. Financial times.

According to the analysts following Alphabet, there is still no shortage of further upside potential. On average, analysts have a price target of $153 for the stock, compared to the current level of $139. There are 54 buy recommendations, eight hold recommendations and no one thinks the stock should be sold.

Reduce

The sunny stock market story has cast some shadow over the fact that Alphabet, like the other tech giants, has undergone major rounds of downsizing in 2023.

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Show all positions

In January, Google announced it would eliminate 12,000 positions, or about six percent of the total.

Several hundred positions in the recruiting department were eliminated in the third quarter, in addition to further job cuts at Waymo and in the news department, CNBC writes.

Until the third quarter, increasingly sharp inflation, combined with a decline in advertising revenue and increased competition with Tiktok, meant that the last four quarters before that ended with single-digit annual growth on the top line.

In the third quarter, the US Department of Justice also initiated proceedings against Google, based on its dominant position in the field of search engines.

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02:06

Published: 18.10.23 — 01:30

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Double-digit growth for Alphabet for the first time since 2022: revenue of $76.7 billion in the third quarter

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