TLDR
- Alphabet’s Q2 2024 profit increased 28.6% year-over-year to $23.6 billion
- Revenue rose 13.6% to $84.74 billion, beating analyst estimates
- AI initiatives are driving growth, especially in cloud services
- Losses from AI research nearly doubled to $2.3 billion
- Google CEO highlighted “tremendous momentum” in search and cloud businesses
Alphabet, the parent company of Google, reported strong financial results for the second quarter of 2024. The tech giant saw significant growth in both profit and revenue, largely driven by its investments in artificial intelligence (AI) technology.
According to the company’s earnings report, Alphabet’s net income for Q2 reached $23.6 billion, marking a 28.6% increase compared to the same period last year.
This translates to earnings of $1.89 per share, up from $1.44 per share in Q2 2023. The company’s revenue also saw a healthy bump, rising 13.6% to $84.74 billion. This performance exceeded expectations, surpassing analyst estimates by over $14 billion.
Google CEO Sundar Pichai highlighted the company’s progress in AI as a key factor in its financial success.
“Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud,” Pichai stated. “We are innovating at every layer of the AI stack.”
The cloud division, in particular, showed impressive growth. For the first time, Alphabet’s cloud business surpassed $10 billion in quarterly revenue, generating a $1 billion operating profit. Pichai noted that AI-powered solutions for cloud customers have already produced billions in revenue and are being used by over two million developers.
However, Alphabet’s increased focus on AI also came with higher costs. The company reported a loss of $2.3 billion from “Alphabet-level activities,” which primarily includes AI-focused research and development.
This figure nearly doubled from the $1.2 billion loss reported in Q2 2023, reflecting the company’s substantial investments in AI technology.
$GOOG Alphabet Q2 FY24:
• Revenue +14% Y/Y to $84.7B ($0.5B beat).
• Operating margin 32% (+3pp Y/Y).
• EPS $1.89 ($0.04 beat).☁️ Google Cloud:
• Revenue +29% Y/Y to $10.3B.
• Operating margin 11% (+6pp Y/Y).▶️ YouTube ads +13% to $8.7B. pic.twitter.com/00xSEVe2uG
— App Economy Insights (@EconomyApp) July 23, 2024
Despite these increased expenses, Alphabet’s core businesses continued to perform well. The majority of the company’s revenue still came from Google and YouTube advertisements, demonstrating the enduring strength of its established platforms.
In terms of stock performance, Alphabet shares have risen 31.5% so far in 2024, outpacing tech rivals like Microsoft, Apple, and Amazon. However, all these companies trail behind Nvidia, the GPU chipmaker that has seen its stock price surge by over 150% this year due to the AI boom.
Pichai expressed optimism about Alphabet’s position in the evolving tech landscape. “Our longstanding infrastructure leadership and in-house research teams position us well as technology evolves and as we pursue the many opportunities ahead,” he said.
The financial results underscore Alphabet’s commitment to AI as a key growth driver. While the increased spending on AI research has impacted short-term profits, the company appears to be betting on these investments to fuel long-term growth and maintain its competitive edge in the rapidly evolving tech sector.
