Google's AI and Cloud Investments Pay Off Big Time

In the third quarter of this year, Alphabet, the parent company of Google, saw a huge jump in profits—a whopping 34 percent! This increase was mainly driven by the strong growth in their cloud business. Why the sudden boost? Well, there's a high demand for computing and data services that help train and run artificial intelligence models. You might be wondering, "Are these investments paying off? " The answer is a resounding yes! Even though AI requires a lot of money, the returns are looking good. Take Google Cloud, for instance. Its revenue shot up by 35 percent to $11. 4 billion, and the operating profit? It went from $266 million to a staggering $1. 9 billion in just one year. The total income for Alphabet was $26. 3 billion, which was more than what analysts expected. Their revenue also climbed by 15 percent to $88. 3 billion, shattering the average estimate of $86. 3 billion. Sundar Pichai, the CEO, highlighted that their long-term investments in AI are really paying off. He mentioned that customers are eager for their specialized chips and the popular AI Overviews feature in search.But let's not forget about the competition. Google is still behind Microsoft's Azure and Amazon Web Services in the cloud market. This week, Microsoft even accused Google of running secret campaigns to sway regulators. Despite this, Google's core search and advertising businesses still grew by 10 percent to $65. 9 billion. YouTube's revenue also increased by 12 percent to $8. 9 billion, with ad and subscription sales hitting over $50 billion in the last four quarters. Investors are happy, with Alphabet's shares jumping over 6 percent in pre-market trading on Wednesday. The company's market cap is now a whopping $2. 1 trillion, making it the fourth most valuable listed company worldwide.