Alphabet outperforms in both revenue and profit, boosted by cloud sales

Google parent alphabet reported a third-quarter profit that beat both sales and profits. The company's shares rose 3% on the results.

Here are the results:

• Earnings per share: $2.12 versus $1.85 expected from LSEG
• Revenue: $88.27 billion vs LSEG expects $86.30 billion

Here are other numbers Wall Street has been watching:

• YouTube advertising revenue: $8.92 billion versus $8.89 billion, according to StreetAccount
• Google Cloud revenue: $11.35 billion vs. According to StreetAccount, $10.88 billion
• Traffic Acquisition Cost (TAC): $13.72 billion versus $13.53 billion, according to StreetAccount

Alphabet's strong quarter kicks off a week of gains for mega-cap tech companies. Meta and Microsoft report on Wednesday, followed by Apple and Amazon on Thursday.

Alphabet's revenue rose 15% year-over-year, which was stronger than the year-ago quarter.

Alphabet's third quarter was marked by external and internal upheaval, including at the highest levels of leadership and in its most important business unit.

Earlier this month, the company replaced Prabhakar Raghavan, the company's search and ads chief since 2018, with Nick Fox, a longtime executive known for his role in Google's Assistant division. Additionally, the team working on the Gemini app, which includes the company's direct-to-consumer artificial intelligence products, will join Google DeepMind, led by Demis Hassabis.

The moves came as Google continues to restructure its teams to move faster in the AI ​​arms race, where it faces increasing competition from new entrants like OpenAI's ChatGPT.

During the quarter, the company also faced evolving multiple antitrust lawsuits related to its search and advertising businesses. In August, the company was found guilty by a US federal judge who ruled that Google unlawfully held a search monopoly, marking the first anti-monopoly decision against a technology company in decades.

In early October, the DOJ made recommendations about Google's business practices in the search engine business and indicated that it was considering a possible breakup of the tech giant as an antitrust remedy, particularly to force the company to make “structural” changes to Chrome, Android and the Google Play app Store company.

Additionally, the DOJ proposed limiting or prohibiting standard agreements and “other revenue sharing agreements related to search and search-related products.” This includes Google's search position agreements with Apple's iPhone and Samsung devices. These are deals that cost the company billions of dollars in payouts each year, but position Google as the default search engine for these products.

Because of the lengthy legal process, the company is likely many years away from being forced to make any corporate changes.

In a separate antitrust case, a U.S. judge issued a preliminary injunction in early October that will force the company to offer alternatives to its Google Play Store for downloading apps to Android phones. However, the judge has now granted Google a break on the preliminary injunction.

Google was back in court in September, facing off against federal prosecutors for the second time, this time over the DOJ's antitrust case against Google's ad tech business. The trial's closing arguments will take place on November 25th.

Outside of courthouses, Google also made a few product announcements during the quarter.

In August, the company announced its new Android software update and its latest line of Pixel smartphones that use Google's Gemini AI assistant. The company doesn't make much money from its hardware business, but the latest Android features could help Google bring in new revenue through its Gemini AI subscription program.