The parent company of Google, Alphabet has seen its second quarter profits rise due to a combination of growing cloud computing sales as well as search engine advertising.
Alphabet exceeded market expectations by reporting a 14% increase in revenue, to $84.7 billion. It also increased its net income or profit to $23.6 billion, up 29 percent. Wall Street consensus had predicted revenue of $84.2 Billion. In after-hours Wall Street trading, the report boosted Alphabet shares by 2%, or $3.55.
The results of the search giant, the first big American tech company to announce earnings for this season, showed a surge in sales for artificial intelligence-powered services.
Google’s cloud computing division has seen revenues increase by 29 percent to $10 billion as more companies adopt AI. Google’s advertising revenues increased by 11 per cent to $64.6 billion.
Silicon Valley faces pressure to prove that multi-billion dollar investments in artificial intelligence will result in higher returns.
Alphabet’s shares have risen by nearly a third this year due to the excitement about AI.
Alphabet’s AI technology has been used to improve enterprise software, from Gmail to Google Docs. It competes with Microsoft which invested early in OpenAI and ChatGPT which is threatening to disrupt the search market.
Sundar Pichai is the chief executive officer of Alphabet. He said: “Our performance in this quarter demonstrates our continued strength in search, and momentum in cloud.” We are innovating on every level of the AI stack.”
Alphabet, one of the largest companies in the world with a valuation of $2.3 trillion, is a public company. The company makes the majority of its revenue from selling advertising space on sites like its YouTube video-sharing platform, Google search engine and others. The company, which is based in Mountain View in California, has also interests in smartphones and self-driving vehicles.
Google announced AI-powered summaries for Search at a developer’s conference in May. It also improved its Gemini AI Model to compete better with OpenAI and Microsoft services. Google will also launch new Pixel devices next month with AI capabilities.
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