Alphabet's $100 Billion Quarter Shows AI Isn't Just for Chips, It's for Ads, Too | The Motley Fool

"It wasn't so long ago that people were really concerned about Alphabet . The company was embroiled in lawsuits filed by the Justice Department alleging unfair practices, and ChatGPT posed a direct threat to Google's dominant search business. But Alphabet shook those fears off. The legal threats are gone. Google's AI-powered search is proving to be popular, and Alphabet is having a fabulous year. It's the second-best performing member of the " Magnificent Seven" cohort of stocks, with a 48% gain that trails only Nvidia."

"Alphabet announced its first-ever quarter of posting $100 billion in revenue in its third-quarter results on Oct. 29. And while the company got a lot of attention for its successes with Google Cloud and its planned spending on artificial intelligence (AI) infrastructure, I was most struck by Alphabet's results as an advertising cash-printing machine. Alphabet's advertising numbers Make no mistake: Even in an AI-driven world, advertising is the heartbeat that drives the company."

"The company's strong growth in Google Search advertising is particularly encouraging for investors, as Google is facing increasing pressure from generative AI chatbots, as well as platforms such as TikTok and Instagram. But Google Search has been able to maintain its dominant market share of 90% of global internet searches. Google incorporated AI into its search engine, rolling out AI Overviews that appear at the top of a Google Search query."

Alphabet posted a record quarter with $100 billion in revenue and $102.34 billion total in Q3, driven primarily by advertising. Google Advertising generated $74.18 billion, representing 72% of total revenue and rising 12.6% year over year. Google Search sustained roughly 90% of global internet searches even amid competition from generative AI chatbots and social platforms. Google integrated AI features into search, deploying AI Overviews and a Google AI mode that uses the Gemini chatbot for conversational answers. Advertising continues to provide the cash flow that enables spending on Google Cloud and AI infrastructure.

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