Capital expenditures in 2025 expected to be higher, says CFO
- Google parent Alphabet said on Tuesday its AI investments were "paying off" as it reported a 35% surge in its cloud business and U.S. election-related spending lifted YouTube ad sales in the third quarter.
"Alphabet is the first major tech name to report earnings, and it hasn't disappointed," said Matt Britzman, senior equity analyst at Hargreaves Lansdown. "Cloud growth was strong ... which continues to support the argument that the major cloud providers are well-placed to benefit from the AI revolution."
In the third quarter, Alphabet's capex rose 62% to $13 billion. The fourth quarter is expected to be similar, she said. But its cloud business grew at the fastest pace in eight quarters - to $11.35 billion - thanks to enterprises doubling down on cloud spending, which is essential to power artificial-intelligence technologies. Analysts estimated $10.86 billion.
Analysts said users think the company's new AI tools are more effective than previously - a significant improvement from earlier this year when the feature drew harsh criticism for displaying inaccurate answers, including a pizza recipe that listed glue as an ingredient. Alphabet's digital advertising sales - the biggest chunk of its total revenue - rose 10% to $65.85 billion in the third quarter. But that pace of growth slowed from the second quarter.
Google Ad Business Rise AI Spending AI Investment
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