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Google parent Alphabet topped Wall Street revenue targets on Tuesday in third-quarter financial results that showed strong growth in the company’s core businesses and offered a glimpse of the potential payoff from its long-running AI efforts.

The company said revenue grew 15% to $88.3 billion in the third quarter, above Wall Street targets of $86.3 billion. Alphabet’s focus on keeping costs in check, meanwhile, helped boost net income 34% from the year-ago period, to $26 billion, or $2.12 per share.

Alphabet shares rose 5.3% to $180.20 in after-hours trading on Tuesday, following the results.

Google search remained the company’s prime revenue engine, bringing in $49.3 billion in revenue over the quarter, an increase of 12% from a year ago. Revenue from YouTube reached $8.9 billion, an increase of 12%, while revenue from Cloud hit $11.3 billion, an increase of 34%. Meanwhile TAC, or traffic acquisition costs, were $13.7 billion, up almost 9%, and earnings per share rose to $2.12.

Google is locked in a fierce competition with rivals Amazon, Meta, and Microsoft on several fronts, including cloud computing, advertising, and AI. Those companies are due to report their quarterly earnings on Wednesday and Thursday.

During a call with analysts, Pichai repeatedly called out the company’s burgeoning success with people and companies using its AI its various tools running on Google’s Gemini models. That includes Google. Pichai said that more than one-quarter of all new code at Google is now generated by AI, with human engineers checking the work for accuracy.

“By any measure – token volume, api calls consumer usage, business adoption – usage of the Gemini models is in a period of rapid growth,” he said.

Meanwhile, the company’s overall employee headcount is down by 1,112 people compared to a year ago. Just this year, Google has carried out a series of reorganizations and consolidation of teams, including putting more teams under DeepMind, its core AI group. Most of these changes are separate from the mass layoffs Pichai revealed at the beginning of 2023.

Prior to Wednesday’s earnings call, Pichai said in a statement that the company’s “l(fā)ong-term focus and investment in AI” are starting to pay off with both enterprise customers and regular consumers.

“In Search, our new AI features are expanding what people can search for and how they search for it,” Pichai said. “In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers, and win larger deals. And YouTube’s total ads and subscription revenues surpassed $50 billion over the past four quarters for the first time.”