Alphabet Inc., the parent company of Google, has released its second-quarter results along with impressive results pointing to strong growth through AI. Alphabet’s revenue rose by 14% compared to the same quarter of the same year.
The company’s net income was $23.62 billion, or $1.89 per share, 29% higher compared to the same period last year. The company’s revenue reached $84.7 billion, outpacing the expected $84.3 billion.
AI-powered search engine boosts Google’s revenue
Another factor that has contributed to the recent achievements of Alphabet is the integration of an AI tool into Google’s search engine. This update rolled out in May, is an AI-based feature that offers conversational answers to users’ queries and demises the importance of links in search results.
Also read: Samsung announces major AI investment in smartphones
Google advertising revenue also generated $64.6 billion against the market expectation of $64.5 billion. Even though some of the online publishers have claimed that Google may likely reduce the traffic to their websites, the company has not experienced a decline in attracting advertisers. This strategic change has not only assisted Google in sustaining itself but also cemented its position in the digital advertising market.
The stock has risen by 30% this year as a result of the opportunities expected to be available in the AI field. In Q2, the company’s DeepMind and Google Research units invested $2. 2 billion to develop AI models, up from $1.1 billion in the same quarter last year.
Analyst predict long-term AI revenue growth
Jefferies analyst Brent Thill noted that in the pilot phase of companies’ AI adoption, companies do not expect to see material revenue from AI until 2025-2026. Alphabet’s AI Overview feature, which was launched in May, also had some issues with accuracy at the beginning and had to be fine-tuned for better user experience.
Google Cloud led the charge with revenue of $10.35 billion and operating income of $1.17 billion. These results exceeded the market estimates of $10.1 billion in revenue and $982.2 million in operating income. Compared with Q2 2023, the cloud segment realized revenue of $8 billion and operating income of $395 million; therefore, the growth is apparent. Microsoft and Amazon, Alphabet’s competitors, also presented year-to-date stock returns. Alphabet has the highest increase in stock, 30%, while Microsoft has 18% and Amazon has 22%.
