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Alphabet’s revenues jumped 14 per cent in the second quarter, with double-digit growth in advertising suggesting that AI chatbots like OpenAI’s ChatGPT have not yet made a dent in queries on its dominant search engine.
Even stronger growth in its cloud computing business demonstrated the rapacious demand for computing and data services as Big Tech companies and start-ups race to build large language models and integrate AI into their businesses.
Revenues rose to $84.7bn from $74.6bn in the three months to June, the parent company of Google said on Tuesday, beating the average analyst’s estimate of $84.2bn. Net income was $23.6bn, up 28 per cent from $18.4bn in the same period a year earlier, exceeding expectations for $22.9bn.
Alphabet’s stock, which was up 1.5 per cent in after-hours trading, has risen by almost a third this year, giving it a market capitalisation of $2.26tn and making it the world’s fourth most valuable listed company behind Apple, Microsoft and Nvidia.
Advertising revenue — which accounts for the vast majority of Google’s top line — grew 11 per cent to $64.6bn, matching consensus forecasts. Ad revenue on YouTube also rose 13 per cent to $8.7bn, while Google Cloud’s services business saw a 29 per cent increase to $10.3bn.
Google is one the first of the so-called Magnificent Seven technology companies to report earnings and as such will be closely watched to see how the sector’s vast expenditures on generative AI are translating into increased revenue.
Alphabet’s capital expenditure rose again to $13bn, $1bn more than in the prior quarter, as it continued to invest in data centres and its own AI suite of products, called Gemini.
The company said it would pay a second-quarter dividend of 20 cents a share worth about $2.5bn. The payout follows Google’s first dividend earlier this year, breaking with a past policy to only use share buybacks to return money to investors.
“Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud,” said chief executive Sundar Pichai “We are innovating at every layer of the AI stack. Our long-standing infrastructure leadership and in-house research teams position us well as technology evolves.”
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