The News
Alphabet, Google’s parent company, reported $88.29 billion in revenue for the third quarter of 2024 — a 15% increase from the previous year — in earnings that reflected artificial intelligence-powered growth.
The boost was helped by Google’s Cloud division, which increased revenue by 35% year-on-year and brought in $11.35 billion for the quarter, beating analysts expectations.
Cloud computing is becoming essential to the development of artificial intelligence, and its growth suggests that AI may be finally driving returns for investors.
SIGNALS
AI optimism is growing
Once seen as a speculative bubble, AI companies “are likely to continue driving returns for investors,” an analyst at Goldman Sachs wrote. Elon Musk’s xAI, for example, is in talks for funding that would value the company at around $40 billion, almost doubling from a few months ago, reflecting investors’ appetite. Musk is an AI optimist, recently predicting the tech will bring an age of abundance. SoftBank CEO Masayoshi Son is also optimistic: He forecast that Artificial Super Intelligence — 10,000 times smarter than humans — will be achieved by 2035, freeing people from labor. “We are born crying and die crying,” Son said in Riyadh during the Future Investment Initiative. “In between, we should be happy. We should let the robots do the work.”
Cloud computing is big business
As more companies move their data online and AI becomes more ingrained in everyday work tasks, requiring more processor power, the cloud sector has become fiercely competitive, the Financial Times noted. Amazon and Microsoft are the undisputed leaders in the area, with Google trailing behind. But the search giant has undergone a significant reorganization this year to try and pull ahead in the AI race, CNBC added, and its competitors don’t underestimate it: This week a Microsoft lawyer published a blog post accusing Google of trying to discredit it with its lobbying efforts in Europe.
Google has faced significant regulatory scrutiny this year
Google is under significant pressure from antitrust regulators, facing three separate cases in the US: In October, a court ruled the company wields an illegal monopoly over search, a decision that could end with a forced breakup of its business, changing the internet as we know it, Vox wrote. Also this year, Google was ordered to open up its Android app store to competitors, and it is facing another antitrust case on its ad business. The scrutiny is unlikely to stop there, the S&P Global noted, citing analysts — both for Google, and for Big Tech more broadly, although “the impacts to the business models of the tech stalwarts” will likely remain “relatively insulated.”