YouTube Ad Revenue Rises 9% But Parent Alphabet Misses Wall Street’s Q3 Targets; Stock Drops
YouTube’s advertising revenue rose 9% to $11.2 billion in the third quarter, while parent company Alphabet’s shares fell 8% in after-hours trading after its results fell short of Wall Street forecasts. The figures matter as investors assess whether major technology companies’ heavy spending on artificial intelligence will deliver sufficient returns.
Alphabet reported total revenue of $127.6 billion, up 25% year on year and its 13th consecutive quarter of double-digit growth, but below the $127.8 billion consensus estimate. Earnings per share were $2.12 against forecasts of $3.01. Chief executive Sundar Pichai said the Gemini app had reached one billion users; he also reported more than 150 million YouTube Music and Premium subscribers, including trials, and said Alphabet was on track for $500 billion in annual revenue.
In short
- YouTube advertising revenue increased 9% to $11.2 billion.
- Alphabet shares fell 8% after results missed forecasts.
- Earnings per share were $2.12, against expectations of $3.01.
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The case for
The results show strong underlying growth: Alphabet’s revenue rose 25%, YouTube advertising increased 9%, and the company reported large audiences for Gemini and YouTube subscriptions. Investors who see AI spending as a long-term investment may judge that user adoption and continued expansion could eventually generate substantial returns, making one quarter’s shortfall less important.
The case against
Investors can reasonably focus on the gap between that growth and expectations: revenue missed consensus, earnings per share were well below forecasts, and the share price fell sharply. Given the scale of Alphabet’s AI spending, they may question whether adoption will translate into profits soon enough to justify the costs and the market’s expectations.
Explained simply
Alphabet is the technology company that owns Google and YouTube. It earns money from advertising shown across its services, including YouTube, and from subscriptions such as YouTube Music and Premium.
Investors compare a company’s results with forecasts made by analysts, often called Wall Street estimates. They also watch how much large technology firms spend on artificial intelligence and whether that investment can support future growth.
YouTube’s advertising business is one part of Alphabet, alongside Google’s search and other services. The results give investors a way to judge how different parts of the company are performing and how its growth relates to expectations.
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