Google LLC’s parent company Alphabet Inc. crushed Wall Street’s expectations as it delivered more than $100 billion in quarterly revenue for the first time ever, sending its stock higher in extended trading.

The company reported third-quarter earnings before certain costs such as stock compensation of $3.10 per share, easily beating the analyst consensus estimate of $2.33. Revenue for the quarter rose 16%, to $102.35 billion, breezing past the $99.89 billion target.

They were solid numbers and they helped to increase the company’s bottom line. All told, Alphabet delivered net income of $34.97 billion, up from $26.3 billion in the year-ago quarter. The company would have profited even more, had it not been slapped with a $3.45 billion fine by European Union regulators after being found guilty of anticompetitive practices in its lucrative advertising business, which was deducted from the total.

Alphabet’s Google Cloud business unit demonstrated solid momentum during the quarter, benefiting from surging demand for its artificial intelligence tools and services. The company also said it’s ramping up its capital expenditure for the fiscal year, saying it now forecasts spending to hit $91 billion to $93 billion, up from a prior forecast of $75 billion to $85 billion.

Alphabet Chief Financial Officer Anat Ashkenazi told analysts on a conference call that the company expects to increase its spending even more during fiscal 2026, and promised to provide more detail on that during the company’s fourth quarter earnings call in three month’s time. Most of the company’s capex goes towards building out its data center infrastructure for Google Cloud and AI, where it has seen rising demand for its services. It’s scrambling to build up its cloud infrastructure to accommodate a growing backlog of customers that want to access its services.

“We continue to drive strong growth in new businesses,” said Alphabet Chief Executive Sundar Pichai (pictured). “Google Cloud accelerated, ending the quarter with $155 billion in backlog.”

Ashkenazi explained that much of the backlog stems from demand from enterprises looking to tap into Google Cloud’s AI infrastructure, including its high performance processors and services related to Gemini 2.5. The rising demand meant the unit delivered revenue of $15.15 billion during the quarter, up 35% from a year earlier.

“We have signed more deals over $1 billion through Q3 this year than we did in the previous two years combined,” Pichai said on the call. That includes a new $10 billion cloud computing agreement with Meta Platforms Inc. announced in August that will span six years, and the recent deal with Anthropic PBC.

The results suggest that Alphabet is keeping pace with its closest competitor Microsoft Corp., which reported 40% revenue growth in its Azure cloud business when it posted its latest results today. Like Alphabet, Microsoft is racing to catch up with the cloud computing leader Amazon Web Services Inc. and is gaining ground with each passing quarter.

On the conference call, Pichai said that more than 70% of existing Google Cloud customers are also using the company’s AI services. That’s not surprising, because Google has been pushing hard to upsell to its existing client base. The Gemini AI app now has more than 650 million monthly active users, he said, up from 450 million just three months ago.

That suggests Gemini is perhaps gaining on, or at least keeping pace with, OpenAI Group PBC, whose CEO Sam Altman said earlier this month that ChatGPT recently surpassed 800 million users per week.

Investing.com analyst Thomas Monteiro told SiliconANGLE that Google Cloud’s revenue surpassed even the loftiest of analyst’s expectations and demonstrates immense demand for data and AI across all business segments. “Given the competitive environment, it’s impressive that Alphabet managed to pull this off without hurting margins,” he said. “What’s even more interesting is that capex didn’t put the pressure on margins many expected, leaving the company with a healthy outlook ahead. That was the key reason behind the big earnings-per-share beat.”

Holger Mueller of Constellation Research Inc. agreed, saying Google is firing on all cylinders, with all of its major business units across all regions showing strong growth during the quarter. He said one reason for this is that Google Cloud is the only one of the top cloud infrastructure providers to offer a fully integrated AI stack with its Tensor Processing Units. “Sundar Pichai said Google is now processing 7 billion tokens a minute, and this could likely trigger a new KPI front, after OpenAI said earlier this month it’s processing 6 billion tokens per minute,” the analyst said.

It’s not just cloud and AI where Alphabet is showing strength, though. The company’s search business unit delivered revenue of $56.56 billion in the quarter, up 15% from a year earlier, with YouTube ad revenue coming in at $10.26 billion, exceeding the Street’s $10.01 billion target. Overall, Alphabet’s ad revenue came to $74.18 billion, up from $65.85 billion in the year-ago period.

Monteiro said the healthy ad revenues was a bit of a surprise, as some analysts had been worried following Netflix Inc.’s disappointing results last week. “Much of the resilience comes down to a strong strategy across emerging segments, particularly shorts,” the analyst said. “Search deserves a special mention too. In a world where AI-driven search volumes are steadily taking market share and reshaping Alphabet’s legacy business, this report makes it clear the company isn’t ready to give up its lead anytime soon.”

Alphabet’s Other Bets segment, which combines revenue from the self-driving car unit Waymo, the life sciences unit Verily and other nascent businesses, delivered total revenue of $344 million in the quarter, down from $388 million in the year-ago period. All told, those businesses generated a net loss of $1.42 billion

Investors were pleased with Alphabet’s results, which pushed the company’s stock up 6% after-hours, adding to a gain of just over 2% during the regular trading session. All told, the company’s stock is now up 45% in the year to date.

Photo: Alphabet