Microsoft Teaching Google A Lesson As Alphabet Share Fall

Unlike archrival Microsoft, Google’s parent Company shares have started to tank, as analysts take in slowing cloud revenues various investigations into the Companies business and potential fines and restrictions on their business in places such as the EU.

Also of concern is the late development of AI with Microsoft Copilot already delivering benefits for millions of Windows users.

Google parent Alphabet’s cloud business crawled to its slowest in at least 11 quarters, sending the company’s stock down 5.7% after hours, as sales at rival Microsoft’s cloud unit Azure boomed.

The drop in Google’s share price despite beating Wall Street estimates for profit and sales, shows how much investors want the company to deliver gains in artificial intelligence, and show the cloud business remains competitive against a more powerful Azure from Microsoft and Amazon’s AWS.

Google Cloud third-quarter revenue rose 22.5% to $8.41 billion, the slowest growth since at least the first quarter of 2021. The cloud unit reported an operating income of $266 million, compared with an operating loss of $440 million a year ago. Wall Street expected cloud computing revenue of $8.62 billion.

By contrast, revenue from Microsoft’s Intelligent Cloud unit, which houses the Azure cloud computing platform, grew to $24.3 billion, compared with analysts’ estimate of $23.49 billion, LSEG data showed. Azure revenue rose 29%, higher than a 26.2% growth estimate from market research firm Visible Alpha. Microsoft shares rose 5% after hours.

The company recorded ad revenue of $59.65 billion in the third quarter, compared with $54.48 billion a year earlier. Analysts on average had expected $59.12 billion in revenue from its advertising business. Within the company’s advertising segment, YouTube ads reported revenue of $7.95 billion compared with $7.07 billion last year.

Alphabet reported a net profit of $19.69 billion for the July-Sept. period, compared with $13.91 billion a year earlier.

Revenue for the quarter ended Sept. 30 stood at $76.69 billion, compared with estimates of $75.97 billion, according to LSEG data.

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David Richards

David Richards has been writing about technology for more than 30 years. A former Fleet Street journalist, he wrote the Award Winning Series on the Federated Ships Painters + Dockers Union for the Bulletin that led to a Royal Commission. He is also a Logie Winner for Outstanding Contribution To TV Journalism with a story called The Werribee Affair. In 1997, he built the largest Australian technology media company and prior to that the third largest PR company that became the foundation company for Ogilvy PR. Today he writes about technology and the impact on both business and consumers.