Google parent Alphabet reported its third quarter earnings on Tuesday after the market close, revealing better-than-expected results. The company's earnings for the quarter ending September 30 showed a significant jump of 46% to $1.55 per share, surpassing consensus estimates. This increase in profits was attributed to cost-cutting measures and higher investments in artificial intelligence, which helped improve Alphabet's profit margins.

Alphabet's gross revenue for Q3 rose by 11% to $76.69 billion, slightly below analyst expectations. Advertising revenue, a major revenue stream for Google, saw a 9% increase to $59.6 billion, exceeding estimates of $59.1 billion. YouTube, the popular video-sharing platform, also delivered a strong quarter with ad revenue rising by 12% to $7.95 billion, surpassing predictions of $7.82 billion.

However, the performance of Alphabet's cloud-computing business fell short of expectations. Cloud-computing revenue increased by 23% to $8.41 billion, missing estimates of $8.64 billion. This slower growth in cloud sales led to a 4.5% decrease in Alphabet's stock price, down to $132.60 in extended trading.

Though Google's cloud-computing business experienced a 28% growth in the previous quarter, analysts speculate that the industry's competitiveness and the uneven nature of cloud services have impacted Alphabet's results. While Google's investments in AI startups may eventually yield positive results, it is not currently driving sufficient growth for Google Cloud to meet investors' expectations.

Alphabet's capital spending for Q3 stood at $8.1 billion, slightly below consensus estimates of $9.1 billion. The company also continued its share repurchase program, buying back $15.78 billion worth of its own stock, similar to the previous quarter.

Looking ahead, there are additional concerns as Google's internet search-related payments to Apple have become a key issue in the Department of Justice's ongoing antitrust lawsuit against Alphabet. These payments, known as traffic acquisition costs, increased by 7% to $12.64 billion in Q3.

Despite the cloud-computing setback, Alphabet's overall performance has been strong, with the company's shares gaining 55% so far in 2023. This positive trajectory reflects investors' confidence in the company's ability to navigate challenges and continue its growth in the digital advertising market.

In conclusion, Alphabet's Q3 earnings report showcased strong performance from Google, beating consensus estimates. The company's focus on cost-cutting and AI investments contributed to increased profits. However, slower growth in cloud-computing revenue brought down Alphabet's stock price. As Alphabet continues to face challenges within the cloud industry and ongoing legal issues, its overall performance remains favorable, emphasizing its continued dominance in the digital advertising sector.