Alphabet, the parent company of Google, released its second-quarter financial results on Tuesday after market close. Alphabet largely met analyst expectations for overall revenue and earnings per share but fell short in YouTube advertising revenue, leading to a slight decline in the company’s stock price during after-hours trading.
In the second quarter of the year, Alphabet reported earnings of $1.89 per share, which surpassed the $1.84 per share anticipated by analysts. The company’s total revenue reached $84.74 billion, exceeding the expected $84.19 billion. The overall revenue grew by 14% year-over-year, driven largely by its performance in its core search and cloud businesses. Advertising revenue, which remains a significant portion of Alphabet’s total revenue, reached $64.62 billion, up from $58.14 billion in the same quarter last year.
This growth, however, occurred at a slower pace compared to the first quarter, influenced by rising inflation and interest rates that have led to tighter marketing budgets. The company’s net income rose to $23.6 billion for the same period as well. Despite these positive numbers, Alphabet’s shares dropped by approximately 2% in after-hours trading, reflecting concerns over specific revenue segments, particularly YouTube.
“We delivered revenues of $85 billion, up 14% yearon-year driven by Search as well as Cloud, which for the first time exceeded $10 billion in quarterly revenues and $1 billion in operating profit. As we invest to support our highest growth opportunities, we remain committed to creating investment capacity with our ongoing work to durably re-engineer our cost base,” Ruth Porat, President and Chief Investment Officer, Alphabet, said. The company reported a $2.3 billion loss from its AI research division, even as the company’s AI initiatives are driving new growth, with Google Cloud’s AI infrastructure and generative AI solutions generating substantial revenue for the tech behemoth. These AI-powered tools are currently utilized by over two million developers.
YouTube’s advertising revenue was reported at $8.66 billion, falling short of the $8.93 billion projected by analysts. This shortfall suggests increasing challenges within the digital advertising landscape, especially from competitors like TikTok. Despite the miss, YouTube’s ad revenue still showed growth compared to $7.66 billion in the same period last year. On a brighter note, Google Cloud reported $10.35 billion in revenue, surpassing the forecasted $10.20 billion. This marks a significant achievement as the cloud division also posted $1 billion in operating profit for the first time. Alphabet’s TAC was reported at $13.39 billion, slightly below the expected $13.54 billion.
Alphabet’s “Other Bets” division, which includes ventures such as Waymo, reported $365 million in revenue, up from $285 million a year earlier. This segment shows potential for future growth, supported by a new $5 billion multiyear investment in Waymo, as announced by CFO Ruth Porat. During the second quarter, Alphabet achieved several significant milestones in its expansion efforts. Waymo, the company’s self-driving car unit, extended its services to all users in San Francisco, marking its second citywide rollout after Phoenix. CEO Sundar Pichai noted that Waymo is now providing 50,000 weekly paid public rides, primarily in San Francisco and Phoenix.
