What's going on?

On Thursday, Google reported profit and revenue figures for the third quarter that beat Wall Street�s expectations, reassuring investors about its strong advertising performance.

What does this mean?

Google makes most of its money by charging advertisers each time users click on their ads. But over the last year, the amount Google gets paid for each click (the �cost-per-click�) has been coming down and putting pressure on Google�s profitability (a.k.a. margins). This has been partly driven by the shift from desktop to mobile, as ads on mobile make less money for Google. However, this was more than compensated for by a huge increase in the amount of clicks (think: price went down, volume went up). Overall, Google�s revenue surged by 24%.

Also, Google reported smaller losses in its �Other Bets� (which include self-driving cars and healthcare technology) mainly because of higher revenues from its home-device maker Nest and its broadband business Google Fiber.

Why should I care?

For the stock: The stock rose 3% following the announcement, continuing Google�s strong year.

Investors are clearly pleased with Google�s prospects: its stock is up 29% so far this year. If Google can reassure investors about its falling cost-per-click, it could see its stock continue to rise. And there�s some good news on that front: while its cost-per-click is 18% lower than it was a year ago, it actually grew over the last quarter.

For markets: Investors can�t seem to get enough of tech stocks.

Google was only one of a few big tech companies that beat Wall Street�s expectations on Thursday: Amazon, Microsoft, Intel and Twitter all saw their share prices rise after they reported their results. US tech stocks have seen years of strong growth, which has led some to question whether they have risen too far, too fast. However, profit growth in the technology sector is expected to be the second highest in the stock market. Perhaps it�s all a sign of how important technology has become to the overall economy.