Alphabet subsidiary Google’s advertising business has so far easily defied AI challengers. In the last quarter, Google’s advertising revenue rose by a good 13 percent year-on-year to 61.7 billion dollars (57.5 billion euros). The video subsidiary YouTube contributed a good eight billion dollars – around 21 percent more than in the same quarter of the previous year.
The development of Google’s advertising business – especially in web search as its most important money maker – is being watched very closely. A central question is whether attempts by competitors to use artificial intelligence to display direct answers instead of links will leave a mark on the search engine that has dominated for years. Some investors are betting on it: The challenger Perplexity AI was valued at more than a billion dollars in a recent financing round.
Meanwhile, Google itself is also trying to improve web searches with AI functions. For example, on Samsung’s new flagship Galaxy S24 smartphone and newer models of Google’s own Pixel branded phones, you can trigger searches by circling an object or word on the display.
Recently, such offers have been increasingly used, said CEO Sundar Pichai on Thursday. He was convinced that Google would be able to adapt its business model to the new AI possibilities.
At Google parent Alphabet, sales rose by 15 percent year-on-year to $80.5 billion. Analysts on average had only expected around $79 billion. Group profits grew to $23.66 billion from a good $15 billion a year earlier.
The growth of business with software and computing power from the cloud also contributed to this. The division increased operating profit to $900 million from $191 million in the same quarter last year.
Alphabet has also decided to buy back shares worth up to $70 billion. In addition, the announced cash dividend of $0.20 per share was also well received by investors.
Alphabet is heading towards a market capitalization of two trillion US dollars
Alphabet shares ended up 9.97 percent higher at $173.69 in US trading on the NASDAQ on Friday.
With a market capitalization of more than two trillion US dollars, Alphabet would enter an exclusive club, as only Microsoft (2.97 trillion US dollars), Apple (2.62 trillion US dollars) and NVIDIA (2nd place) come from the USA .07 trillion US dollars) to a similarly high market value.
Redaktion finanzen.ch / awp international