Google Ad Surge and YouTube Optimism Send Alphabet Shares Up

Alphabet beat projections for third-quarter sales and earnings after a surge in Google ad volume helped the web-search giant shrug off concerns about regulatory scrutiny and an expensive foray into hardware, according to Bloomberg.

Sales for the quarter rose to $22.27 billion and profit was $9.57 a share, the company said. Analysts on average estimated sales of $22 billion on earnings of $8.34 a share. Alphabet shares rose 3 percent in after-hours trading. It’s up 25 percent so far this year.

Google CEO Sundar Pichai highlighted strong performance from YouTube service and cloud business. YouTube has racked up more than 100 million viewing hours per day in the living room, a 70 percent increase in the past year, Pichai said. He also touted YouTube’s new subscription service, but did not share any figures.

Despite the robust results, the primary focus for investors was Google’s Traffic Acquisitions Costs, payments to phone-makers and web browser makers that run Google search and ads. TAC to these distribution partners, such as Apple, jumped 54 percent to $2.4 billion in the third quarter.

Google doesn’t break out device sales. However, the company’s Other Revenue category includes the hardware business. Revenue there was up 40 percent to $3.41 billion. Google said the largest contributor to that line item during the quarter was its cloud unit.

Alphabet’s more ambitious business units generated the most sales ever in a quarter. Other Bets, subsidiaries like its self-driving car program, Waymo, and home-device maker Nest, continued to pare expenses as well. The group lost $812 million in the quarter, down from $861 million in the same period in 2016. Overall, the units reported sales of $302 million, primarily from Nest and the Google Fiber broadband service.