Alphabet, the parent company of Google and YouTube, has announced its third consecutive quarter of growth as demand for cloud and AI skyrockets.
In Q3 2024, Alphabet revenues increased 15% to $88.3 billion, which the company said reflects "strong momentum across the business".
The good news quickly reverberated through the markets, with the Nasdaq reaching a record closing high and the S&P 500 shooting up by almost 10 points.
“The momentum across the company is extraordinary," said Sundar Pichai, CEO. "Our commitment to innovation, as well as our long-term focus and investment in AI, are paying off with consumers and partners benefiting from our AI tools."
Here are some of the key takeaways from the results:
Google Cloud is raining money
During the last quarter, Cloud brought in revenues of $11.4 billion, up 35% over last year with operating margins of 17%.
"I'm very pleased with our growth," Pichai said. "This business has real momentum and the overall opportunity is increasing as customers embrace GenAI. Our technology leadership and AI portfolio are helping us attract new customers, win larger deals and drive 30% deeper product adoption with existing customers."
Gemini API calls are up 40x
Over the past six months, the number of API calls made to the Gemini GenAI model has increased by forty times.
Gemini has been beefed up with long context understanding, multimodality and agentive capabilities.
"By any measure, token volume, API calls, consumer usage, business adoption, usage of the Gemini models is in a period of dramatic growth," Pichai revealed. "And our teams are actively working on performance improvements and new capabilities for our range of models."
Snap, the photo-focused social network, has used Gemini to power "innovative experiences" within its My AI chatbot, recording an 2.5x uptick in engagement.
YouTube hits $50 billion revenue
Over the past year, YouTube's combined ad and subscription revenue has surged ast $50 billion as YouTube TV, NFL Sunday Ticket and YouTube Music Premium drive subscription growth.
"And we are leaning into the living room experience with multi-view and a new option for creators to organize content into episodes and seasons, similar to traditional TV," Pichai said. "At Made on YouTube, we announced that Google DeepMind's most capable model for video generation VO is coming to YouTube Shorts to help creators later this year."
YouTube is also using AI to "greatly improve recommendations", with its LLMs capable of sharing personalised content recommendations. Almost two-thirds of creators are now uploading shorts as the platform tries to compete with TikTok and other portrait-orientated video apps.
Advertising is still a cash cow
Alphabet has been wolfing up digital advertising revenues for some time now. This success continued over the last quarter as advertising revenue grew 10% to $65.9 billion.
Google recently launched two ad formats alongside its AI-powered search tools. The first, shopping ads in Google Lens, leverages the insight that one in four of Lens’s 20 billion monthly searches involve shopping intent. With this new feature, shopping ads appear above and alongside visual search results, improving visibility for businesses as users engage more frequently with Lens for complex searches that combine visual, voice, and text inputs.
The second new feature is AI Overviews, which has embedded search and shopping ads on mobile in the US. These ads are integrated directly into AI summaries and allow users to discover relevant products or services.
The Gen AI hype is not going away anytime soon
Alphabet had a lot to say about AI, confirming that the team within Google Services that is developing the consumer interface to its Gemini models will join Google DeepMind.
Google is enhancing its search capabilities with GenAI, which is "particularly resonating" with younger audiences, whilst AI Overviews (summaries of information from multiple sources at the top of search results) has now been introduced to one billion users.
"As GenAI expands what's possible, we continue to see a significant opportunity in search," Pichai said. "AI really supercharges search. Our new AI-powered features make searches more helpful, and we continue to see great feedback."
