Alphabet, Google's parent company, has announced a surge in revenue for the third quarter, largely driven by its robust Google Cloud division.
The tech giant revealed in its latest financial report that revenues hit a remarkable $88.3bn (£67.8bn), marking a 15% uptick from the previous quarter, as reported by .
Yet the increment in Alphabet's cornerstone advertising business didn't keep pace with the rest of the group.
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Year-on-year, the firm witnessed a more modest ad revenue rise of 10.4%.
Both search advertising and Youtube ad earnings saw an identical climb of 12.2%, taking ad revenues to $49.9bn (£38.3bn) while Youtube raked in $8.9bn (£6.8bn).
According to Hargreaves Lansdown senior equity analyst Matt Britzman: "This is arguably Alphabet's biggest question mark, as the major unknown is what happens to Google search in the world of AI. This quarter was important as it marked the first full period where Google's AI overviews were up and running in the US."
Tech analyst at Quilter Cheviot, Ben Barringer, commented: "While threats are very present in the background, Alphabet continues to innovate and improve its offerings to customers in what is a buoyant digital advertising market".
Alphabet has also been facing upward financial pressure due to increased spending on AI technology.
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With a 62% year-on-year increase, capital expenditures have soared to $13.1bn (£10.1bn).
Alphabet's CFO, Anat Ashkenazi, disclosed expectations for substantial hikes in capital expenditure come 2025, as the company aims to balance hefty AI investments against cost control measures.
Barringer went on to say: "As we look forward, we are working to balance our investments in AI and other growth areas with the cost discipline needed to fund those investments."
Alphabet's net income reportedly surged to $26.3bn (£20.2bn), marking a 33.6 per cent increase from the third quarter of the previous year.
Following the announcement, Alphabet's shares saw a 5 per cent rise in after-hours trading.
Ben Barringer, Tech Analyst at Quilter Cheviot, commented: "Given the medium and long-term threats at play for Alphabet- the Department of Justice and AI agents these are a very clean set of numbers.Britzman concluded by saying: "[Alphabet] hasn't disappointed. cloud growth was strong, and better than expected, which continues to support the argument that the major cloud providers are well-placed to benefit from the AI revolution."
The tech giant's shares have yielded a return of 22.6 per cent this year.