After Google parent Alphabet (GOOGL) reported third-quarter earnings that topped analysts’ expectations, CEO Sundar Pichai and other executives told investors the tech giant is seeing strong gains from demand for artificial intelligence (AI), sending shares up over 5% in extended trading Tuesday.

Investments in AI ‘Are Paying Off and Driving Success’

Pichai told investors the tech giant’s investments in AI “are paying off and driving success,” with strong performance in Google’s search and cloud divisions driven by AI demand.

Google Cloud’s third-quarter revenue surged a whopping 35% year-over-year to $11.4 billion, led by growth in its AI infrastructure and generative AI solutions, along with other core cloud products.

‘For All These AI Features, It’s Just the Beginning’

Pichai added he believes the company could be “uniquely positioned to lead in the era of AI,” with its focus on the emerging tech. “For all these AI features, it’s just the beginning. You’ll see a rapid pace of innovation and progress here,” he said.

Pichai noted the company has seen use of Google Search rise among people who use its AI overviews and that Google Lens is drawing 20 billion visual searches each month.

Chief Business Officer Philipp Schindler said the company’s new AI-powered features “make searches more helpful, and we continue to see great feedback, particularly from younger users.”

AI Developments Expected to ‘Translate to Revenue in the Fairly Short Term’

CFO Anat Ashkenazi, who took over the role in July, suggested the company expects its advances with AI could “translate to revenue in the fairly short term.”

Alphabet invested $13 billion in capital expenditures during the quarter, and Ashkenazi said investors could expect a similar figure in the fourth quarter, with an increase in 2025 as the company ramps up spending on AI.

“This is an area that requires investment,” Ashkenazi said, adding the company’s moves are “based on demand we’re seeing from customers.”

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