Alphabet Inc., the parent company of Google, announced a significant 28.6% year-on-year increase in profits for the second quarter of 2024. The tech giant reported a net income of $23.6 billion and revenue of $84.7 billion, surpassing Zacks Investment Research’s estimates by over $14 billion.
Despite this robust performance, Alphabet faced a substantial $2.3 billion loss from its AI research division, nearly doubling from $1.2 billion in the same quarter of the previous year. The losses, categorized under “Alphabet-level activities,” primarily stemmed from AI-focused shared research and development costs and the development of AI models.
These expenses include investments in AI through Google’s DeepMind and Google Research, both of which are exploring AI applications in advertising and cloud services.
Alphabet’s CEO, Sundar Pichai, highlighted the company’s achievements during the Q2 earnings call, emphasizing the ongoing momentum in search and significant progress in their cloud division, driven by AI initiatives.
“Tremendous ongoing momentum in search and great progress in cloud, with our AI initiatives driving new growth,” Pichai stated. He also noted that Alphabet’s cloud business surpassed $10 billion in revenue for the first time, generating a $1 billion operating profit for the quarter.
“Our AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenue and are being utilized by more than two million developers,” Pichai added.
Q2 Financial Highlights and Market Response
Alphabet’s Q2 revenue saw a 14% increase from the previous year, with a significant portion coming from Google and YouTube advertisements. However, shares of Alphabet Inc. Class A (GOOGL) remained flat on July 23 and fell by over 2% following the release of the financial statement.
Despite the slight dip, GOOGL has risen 31.5% in 2024, outperforming major tech rivals such as Microsoft (MSFT), Apple (AAPL), and Amazon (AMZN), which posted gains of 20%, 21.1%, and 24.3%, respectively.
Nevertheless, all three companies lag behind Nvidia (NVDA), a leading GPU chipmaker. Nvidia has surged by 154.5% in 2024, briefly surpassing Apple and Microsoft as the world’s most valuable company last month.
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