Alphabet released its financials, revealing that after the company had thrown significant cash money into developing AI tools, it had softer-than-expected cloud growth, but overall revenue still beat forecasts.

The reported revenue was buoyed by Google’s resilient advertising, which supported Alphabet to outdo predicted sales revenue for the third quarter.

The cloud computing division, however, did not fare as well.

Google’s Cloud division almost hit revenue forecasts but still fell short by 4%. The division increased by 22% to $8.4 billion, contrasted to expectations for a gain of roughly 26%. Operating income was also less than predicted for the second quarter of 2023.

However, it was not all doom and gloom for the division, as it turned its first-ever operating profit this year.  

Additionally, Alphabet’s total revenue did better than expected, increasing by 11% to $76.7 billion. Gains per share also was above forecast, leaping 46% to $1.55, with post-tax income rising 42% to $19.7bn.

According to the latest earnings report, the company’s sell-in revenue was $67.9 billion, up 11% year over year (YOY), but below the analysts’ expectation of $68.5 billion.

Alphabet’s sell-in revenue primarily can be attributed to hardware products, such as Pixel phones, Nest devices, and Chromebooks. The global chip shortage, said the tech giant affected the sell-in revenue growth, which caused supply constraints and delays for its flagship devices, especially the Pixel 8 and Pixel 8 Pro1.

Considering the current environment, Alphabet’s earnings held up even after a rough start to 2023 and laying off around 12,000 staff. There’s also how deeply Alphabet has dug into its pockets to come up with spending $33.3 billion on research and development, which has increased 14%.  

Sundar Pichai, Alphabet, and Google chief executive, said that the company was making “exciting progress” on AI “and lots more to come”.

Despite not meeting all expectations, Pichai said he’s happy with what they achieved this far for 2023.

“I’m pleased with our financial results and our product momentum this quarter,” he said.

After the results were announced, however, Alphabet’s shares fell 6%.