Alphabet Smashes Revenue Forecasts as AI Investment Drives Growth

Google’s parent company Alphabet has exceeded market expectations in the second quarter, generating total revenues of £96.4 billion, marking a 14 per cent increase year-on-year against Wall Street predictions of £94 billion.

The tech giant’s impressive performance saw net income surge 19 per cent to £28.2 billion, surpassing analyst forecasts of £26.6 billion. Earnings per share demonstrated robust growth, climbing 22 per cent to £2.31.

The company’s core search services delivered strong results, with revenues rising 12 per cent to £54.2 billion, while YouTube’s advertising revenue reached £9.8 billion. Cloud services emerged as a particular bright spot, with revenues soaring 32 per cent to £13.6 billion.

Sundar Pichai, chief executive, highlighted the company’s dominance in artificial intelligence, noting that AI-powered overviews are now utilised by 1.5 billion people. The company’s commitment to AI innovation is evident through its development of Gemini, an AI robot designed for text generation tasks.

Despite reports of talent migration to competitors, with Microsoft reportedly recruiting over 20 researchers from Google’s DeepMind AI lab, Pichai remained confident about the company’s position. He emphasised strong retention metrics and healthy recruitment of new talent.

The company plans to increase its capital expenditure to approximately £85 billion in 2025, focusing on AI infrastructure investments to meet growing customer demand. This strategic move comes as Alphabet faces regulatory scrutiny, with an imminent ruling expected regarding measures to address its search market dominance.