Google parent Alphabet reported its second-quarter earnings after the bell on Tuesday, which beat revenue and profit forecasts over the latest quarter due to its search engine and cloud unit.
The report revealed that the company’s net income has increased more than a quarter to $23.6 billion and the advertising revenue has jumped from 11% to almost $65 billion.
Although advertising revenue, cloud revenue, and earnings per share were able to narrowly topple the analysts’ expectations, YouTube ad revenue fell short compared to the expectations.
The tech giant reported that the cloud businesses are continually growing, topping the $1 billion mark for operating profit for the first time.
However, the investors gave no reactions to this announcement, and the prices were flat.
One rising concern is that Google is spending lavishly on building its generative capabilities and pouring huge money into the data centers that can power those AI models.
Alphabet has reportedly spent $2.2 billion on building AI models across its DeepMind and Google Research organizations. However, we still don’t know when the profits will start to come in.
Jefferies analyst Brent Thill mentioned in his recent client note, “It is still too early to count on AI benefits as most [companies] remain in pilot mode, and material AI [revenue] is more likely a 2025-26 event.”
Google is trying to find stability in the AI overview and released a search function, but it told users to put glue in their pizza or to eat a rock every day. Thus, Google pulled back this feature, considering the responses.
Moreover, to cut back on expenses and focus merely on AI-related projects, it is starting to reduce headcounts in the company.
