Google’s money-making machine is still generating huge profits despite multiple threats

The latest evidence of Google’s prosperity emerged Tuesday with the release of parent company Alphabet Inc.’s results. for the period July-September (File) | Photo Credit: AP

Google is still moving forward as the company navigates important changes to artificial intelligence and battles regulators trying to destroy its internet empire.

The latest evidence of Google’s prosperity emerged Tuesday with the release of parent company Alphabet Inc.’s results. for the period July-September. Alphabet’s profit and revenue grew faster than industry analysts anticipated, largely due to its money-making engine fueled by Google’s ubiquitous search engine.

Alphabet earned $26.3 billion, or $2.12 per share during the most recent quarter, a 34% increase from a year ago. Revenue rose 15% from the same period last year to $88.27 billion.

“Our commitment to innovation as well as our long-term focus and investment in AI has paid off,” said Alphabet CEO Sundar Pichai on a call discussing the results.

Profits would be even higher if Google didn’t spend so much money building its AI arsenal in a tech arms race that includes other industry heavyweights Microsoft, Amazon, Apple, Facebook parent Meta Platforms and rising star OpenAI. AI investment is the main reason Google’s capital expenditures last quarter rose 62% from the same period last year to $13.1 billion.

AI spending will remain at the same level during the current October-December period, and rise even higher next year, according to Anat Ashkenazi, Alphabet’s chief financial officer. But Ashkenazi also emphasized the Mountain View, California, company will act on cost-cutting opportunities in other areas to help boost profits. Alphabet has cut payroll from more than 190,000 employees worldwide early last year to about 181,000 employees today.

In an example of how AI can perform tasks that once required human brainpower, Pichai said the technology now writes more than 25% of the company’s new computer coding.

Investors seem to be happy with the performance and what they are hearing from the company’s executives. Alphabet’s share price rose 5% in extended trading after the numbers came out and the conference call ended.

Investing.com analyst Thomas Monteiro said Alphabet’s share suggests more good news is coming for Big Tech as the week progresses, with quarterly reports from Microsoft, Meta, Amazon and Apple still to come in the coming days.

But a 4-year antitrust case brought by the US Department of Justice has cast a cloud of uncertainty over Google’s future.

After considering evidence presented during a high-profile trial last year, a federal judge declared Google’s search engine an illegal monopoly — a decision that has opened the door to a major upheaval. Earlier this month, the Justice Department recommended that Google be prosecuted as part of a sentence to be determined by US District Judge Amit Mehta next summer.

In addition to the legal attack on the search engine, Google has also been ordered to remove barriers that protect the Play Store for Android smartphone applications. The ruling came earlier this month after a jury ruled that the operation was also an illegal monopoly. Google is also nearing the end of another antitrust trial in Virginia over the technology underlying its digital advertising network.

As if regulatory headaches weren’t enough, Google is also in the midst of major changes to its search engine that increase its emphasis on highlight results produced by artificial intelligence in response to competitive threats to alternative options that rely on the same potential. revolutionary technology.

For now, at least, Google remains a juggernaut.

Digital advertising connected to the Google search engine remains a financial cornerstone. Revenue from the segment rose 12% from a year ago to $49.39 billion. And Google’s cloud division is growing at a stronger rate, due to demand for AI services. The cloud division generated $11.35 billion last quarter, a 35% increase from last year.

But the question of Google’s regulatory dogging remains a concern among investors. Although Alphabet shares have risen more than 20% so far this year, Tuesday’s closing price of $169.68 remained below the high of nearly $192 reached in July before the search engine monopoly ruling came out.