[Earnings Summary] Google, 35% growth in cloud business due to AI investment! Hit record high with strong earnings, up nearly 6% in after-hours trading!

moomooニュース米国株 wrote a column · Oct 30, 2024 18:56

Alphabet, the parent company of Google, $Alphabet-A (GOOGL.US)$は30日(日本時間)に2024年第3四半期(7〜9月)決算を発表した。売上高・利益ともアナリスト予想を上回った。主力事業であるデジタル広告事業の着実な成長と、人工知能（AI）にけん引されたクラウドコンピューティング事業の35％増収が寄与した。

スンダー・ピチャイ最高経営責任者（CEO）は発表資料で「クラウドでは、当社のAIソリューションが既存顧客による製品採用を促進し、新規顧客やより大型の契約の獲得に役立っている」と述べた。

[Earnings Summary] Google, 35% growth in cloud business due to AI investment! Hit record high with strong earnings, up nearly 6% in after-hours trading!

Following the earnings report, the company's stock price temporarily rose nearly 6% in after-hours trading on the 29th in the U.S. stock market.The cloud computing leader also rose about 1%.Earnings Highlight: Net profit increased by 34%! $Amazon (AMZN.US)$and $Microsoft (MSFT.US)$Revenue for the third quarter increased by 15% year-on-year to 88.2 billion70 million dollars, exceeding the market estimate of 86.4 billion38 million dollars.

The stock price of the company temporarily rose nearly 6% in after-hours trading on the 29th in the U.S. stock market.
The cloud computing leader also rose about 1%.Earnings Highlight: Net profit increased by 34%! Revenue for the third quarter increased by 15% year-on-year to 88.2 billion70 million dollars, exceeding the market estimate of 86.4 billion38 million dollars.Net profit per share adjusted increased by 37% year-on-yearto $2.12, exceeding market estimates of $1.981.Net profit increased by 34% year-on-yearto $26.3 billion, surpassing market expectations of $22.8 billion.。

●The cloud business has been a major earner in the recent past, but currently, its revenue growth has slowed down, and the operating margin has decreased. It is still unclear whether Microsoft can overturn this trend. However, the integration of Office and Copilot may significantly alter the revenue growth rate and operating margin of the software business.The revenue view compared to the same period last year.An increase of 35% to $11.353 billion.Exceeded market estimates of $10.794 billion.The revenue growth rate reached a high level for the first time in 8 quarters.

●advertising businessThe revenue view compared to the same period last year.Exceeded market estimates of $65.54 billion. Of this, the advertising revenue from the video posting site YouTube increased by 12% to $8.920 billion.Among these, the advertising revenue from the video posting site, YouTube, was $8.920 billion, an increase of 12%.According to Mr. Pichai, the revenue of the same business has exceeded $50 billion in the past four quarters.

●Sales of other businesses such as subscription platforms, devices, etc.The revenue view compared to the same period last year.An increase of 27.8% to $10.56 billion.exceeding market expectations of $9.793 million

●Waymo's self-driving car business, Verily's life sciences business, and other bets divisions.The revenue view compared to the same period last year.It exceeded market expectations of 0.388 million dollars, an increase of 30.6%.It exceeded market expectations of 0.377 million dollars.

Cloud business growth accelerated, reaching record highs.
In the main business, it is seen as the future growth engine.The revenue of the cloud computing business is growing the fastest, highlighting the driving force of AI.。

Google's core search business is mature, and it is looking to the growth of the cloud business that provides computing power, software, and services to other companies. To compete against industry giants like Amazon and Microsoft, Google is leveraging AI expertise to increase its cloud customer base, also acquiring rapidly growing AI startup companies founded by former Google employees as customers.

Bob O'Donnell, President of Tech Analysis Research, stated, "The growth from the cloud business compensating for the decline in the search business highlights the increasing importance of cloud revenue, as the company continues to diversify its revenue base. It was a fantastic quarter."

Google, which has been seen as lagging behind rival Microsoft in the AI development competition,is working on strengthening its Generative AI 'Gemini' and improving its AI search services, continuing to make substantial investments.。

Google CEO Sundar Pichai stated that investment in AI is bearing fruit through the search and cloud businesses.

Investment in AI infrastructure has turned into a decrease.
Concerns about the return on massive investments in AI are rising in the market, and the company is also addressing investors' concerns surrounding significant investments in AI, infrastructure, and research.

According to the earnings report, Alphabet's Capital expenditure in the third quarter decreased by more than 0.9% compared to the previous period, exceeding analysts' estimates (2.3% decrease from the previous period).。

Alphabet's CFO, Ruth Porat, stated during the earnings call that the company's equipment investment for next year will surpass this year. Equipment investment in the third quarter increased by 62% to 13 billion dollars. A similar trend is expected for the fourth quarter.

During the earnings call after the earnings announcement, Sundar Pichai emphasized that the risk of underinvesting in AI is much greater than the risk of overinvesting. It was explained that Google reduced costs associated with AI answers in search queries by over 90% in 18 months through hardware, engineering, and technological advancements. It was also revealed that the size of the answer-generating AI model called "LaMDA" has doubled.

Pichai also mentioned that Google is heavily investing in new energy sources, including nuclear energy, to address future demands resulting from AI technological advancements.

Revenue from search and YouTube ads has slowed for two consecutive quarters, yet still exceeding expectations.
In the advertising business, revenue from Google search and YouTube ads has been struggling for two consecutive quarters, suggesting difficulties in the advertising business. According to market research firm Emarketer,as competition intensifies with rivals like Amazon, Google is expected to see its market share in the advertising market drop to below 50% next year.Currently

However, even YouTube's advertising revenue, which had been a drag on the growth of the advertising business in the second quarter, increased more than expected.

Google,Google also promotes ads in the feature "AI Overviews," which generates AI to summarize and explain search results.Analysts pointed out that users perceive this new feature as significantly improved from the outset.

However, Angelo Zino, Senior Equity Analyst at CFRA Research, expects Google to start losing market share in the advertising market over the next 2-3 years, saying 'As the market transitions to AI-led, it is clear that competition pressure will increase.'

This article uses automatic translation in some parts.
Source: Bloomberg, Reuters, Alphabet IR Information
ーMoomoo news Kouchi

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