Alphabet, Google’s parent company, just wrapped up a solid second quarter beating market expectations thanks to continued strength in both advertising and cloud. Apart from this, it shocked Wall Street by raising its capital expenditure projection from $75 billion to a whopping $85 billion in recognition of a very large investment in the future.
“AI is positively impacting every part of the business, driving strong momentum, Search delivered double-digit revenue growth, and our new features, like AI Overviews and AI Mode, are performing well. We continue to see strong performance in YouTube as well as subscriptions offerings. And Cloud had strong growth in revenues, backlog and profitability. Its annual revenue run-rate is now more than $50 billion.”
Strong Financials Back AI Ambitions
- Analysts were expecting adjusted earnings per share from Google to be only $2.31, but performance topped expectations by a long shot–$2.31 adjusted earnings per share. The figure for revenue, excluding both traffic acquisition costs, was $81.2 billion, way ahead of the forecast of $79.6 billion. For context, the same quarter last year brought in $71.3 billion.
- Ad revenue alone hit $71.3 billion, higher than the projected $69.6 billion, with Search pulling in $54.1 billion (vs. $52.7B expected), and YouTube ads generating $9.8 billion (vs. $9.5B expected).
Google Cloud didn’t disappoint either, hitting $13.6 billion, beating the expected $13.1 billion. - The company continues to pour resources into its AI infrastructure. This includes expanding its massive data centers powered by both in-house chips and Nvidia processors.
Antitrust Clouds Still Hover
However, Google’s legal troubles still loom. A major ruling by Judge Amit Mehta from the U.S. District Court for the District of Columbia found Google guilty of antitrust violations in the online search market. A follow-up ruling next month could change the game especially if it forces Google to stop exclusivity deals with companies like Apple that make Google Search the default option.
