Google Q3 - Revenue tops $100 billion

Google had quarterly results out last week that were brilliant, propelling its share price to a new all-time high, above $280 per share. It's now the 4th most valuable company in the world, with a market cap of $3.4 trillion.

This was the first quarter ever with total revenue above $100 billion. The core search advertising business, which chips in 55% of those sales, is an absolute money machine. Paid clicks accelerated again.

Google is the best-positioned AI company, with assets across the full tech stack, meaning that they can optimize their Gemini AI tools across every part of their operations. They build their own cutting-edge Tensor AI chips, have their own world-class cloud infrastructure, employ elite coders and engineers, and have developed top-ranked large language models (LLMs) which have been trained on their own data from search, streaming (YouTube), navigation (Google Maps) and browsing (Chrome).

The Google Cloud business is flying. Cloud customer growth accelerated to 34% year-on-year. 70% of cloud customers are using an AI product, and it's bringing in lots of cash. Of course, that means they need more compute, in massive data centres. They raised capital expenditure guidance for the current full financial year from $85 billion to $92 billion.

YouTube is also performing very well and remains the #1 in streaming (Netflix is number 2). AI tools are being deployed to tweak user algorithms, to ensure a more personal, relevant and engaging experience.

This was a very strong quarter for a world-class company that has clearly got its mojo back, after a tough 2024. Sentiment towards Google was very negative back then, with lots of chatter about regulatory problems, anti-monopoly lawsuits and being split up. That's all flipped.

We are patient holders of this great business, and will remain so.