Multinational technology conglomerate Alphabet reported second-quarter revenue and profits that beat analyst expectations.
The company’s performance was driven by rising digital advertising sales and strong demand for cloud computing services, but the company warned that capital expenditures will remain high this fiscal year.
Reuters The company reported strong demand for digital advertising due to the popularity of the Paris Olympics and elections in countries such as the U.S. This is further boosted by a recovery in corporate spending, once again boosting its software business.
Generative AI technology has significantly expanded our cloud business.
The company’s main source of revenue, advertising, fueled by a wealth of consumer data that enables lucrative ad targeting capabilities across Google-parent Alphabet’s platforms, rose 11% to $64.6 billion. Net income for the quarter ended June 30 rose 28.6% from a year ago, beating analysts’ expectations of about $22.9 billion, and ultimately bringing net income closer to $23.6 billion.
Shares initially rose about 2% before retreating to finish the day up about the same percentage point, but are still up more than 30% this year, compared with about 20% for the tech-heavy Nasdaq Composite Index.
“It was another great quarter for Google with better-than-expected results across the board,” said Ido Caspi, research analyst at GlobalX, noting that ad sales and artificial intelligence offerings were the main drivers.
Total revenue rose 14% to $84.74 billion, beating analysts’ consensus estimate of $84.19 billion, according to LSEG data, while advertising revenue from its YouTube division rose 13% to $8.67 billion.
Revenue from cloud computing services, a key indicator of enterprise technology spending, rose 28.8% to $10.35 billion, beating analysts’ expectations of $10.16 billion.
Alphabet spent $13 billion on capital expenditures in the quarter that ended in June. The company did not immediately respond to a request for comment. Chief Financial Officer Ruth Porat said on her final conference call as Alphabet’s chief financial officer that quarterly capital expenditures for the remainder of 2024 will be more than $12 billion.
The company’s capital spending jumped 91% to $12 billion between January and March, raising concerns among investors.
Like its rivals, Alphabet is rapidly rolling out AI-related products as investors continue to pour billions of dollars into the technology.
But its AI search also produced some embarrassing results, such as a suggestion to put glue on pizza to keep the cheese in place, and Google pulled the technology in May to address these issues.
Alphabet CEO Sundar Pichai said in a recent investor call that the technology will be rolled out in more countries, “and you’ll start to see the use cases for this expand.”
Pichai didn’t give a timeline, but said AI products will not only help businesses through cost savings and increased efficiency, but could also lead to increased revenue in the near future.
Despite increased regulatory scrutiny, Google was moving ahead with its biggest acquisition ever, buying cybersecurity company Wyz for about $23 billion, but Wyz informed employees on Monday that it was abandoning the deal and would instead seek to go public.
Google was also in talks to buy customer relationship management company HubSpot before pulling out earlier this month, a deal that would have positioned Alphabet to rival the likes of Salesforce and Oracle in that market.
Google announced on Monday that it plans to keep third-party cookies in its Chrome browser, backing away from an earlier promise to phase out the tiny packets of code used to track internet searches.
This marks a major shift after advertisers expressed concern that the elimination of cookies would limit their ability to collect and analyze information to personalize ads, making them more reliant on Google’s user database.
Revenue from the Mountain View, California-based company’s so-called “other businesses,” which include pilot projects and its self-driving-car unit Waymo, rose 28% to $365 million. Mr. Porat said the company plans a multiyear investment of $5 billion in Waymo, as rival Cruise gradually returns to U.S. roads after a highly publicized crash in October.
Read also: Google’s global expansion: investments in geothermal energy in Nevada and large data centers in Malaysia
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