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Alphabet's revenue rose 14 percent within the second quarter, with double-digit growth in promoting suggesting that artificial intelligence chatbots resembling OpenAI's ChatGPT haven’t yet had an impact on searches on the corporate's dominant search engine.
Even stronger growth within the cloud computing business highlighted the large demand for computing and data services as major technology corporations and startups compete to develop large language models and integrate artificial intelligence into their businesses.
Revenues rose from $74.6 billion to $84.7 billion within the three months to June, Google's parent company announced on Tuesday. This exceeded the typical analyst estimate of $84.2 billion. Net profits amounted to $23.6 billion, a rise of 28 percent over the identical period last 12 months. Here, too, expectations were narrowly exceeded.
The performance “demonstrates tremendous continued momentum in search and great progress within the cloud, with our AI initiatives driving latest growth,” said CEO Sundar Pichai. The CEO has been criticized for moving too slowly in commercializing the technology for giant language models that were originally designed developed by Google researchers but popularized by OpenAI, which is backed by a $13 billion partnership with archrival Microsoft.
Alphabet's share price, which has fluctuated in after-hours trading, has risen by nearly a 3rd this 12 months, giving it a market capitalization of $2.26 trillion and making it the world's fourth most dear publicly traded company after Apple, Microsoft and Nvidia.
Advertising revenue, which makes up the majority of Google's top line, rose 11 percent to $64.6 billion, in step with consensus forecasts. However, growth slowed from the previous quarter, disappointing analysts. YouTube promoting revenue rose 13 percent to $8.7 billion, while Google Cloud's services business saw a 29 percent increase to $10.3 billion.
The results “weren’t as compelling as the primary quarter, when earnings comfortably exceeded expectations,” said Brent Thill, an analyst at Jefferies, adding that they didn’t contain “any exciting results.”
Google is one in all the primary of the so-called “Magnificent Seven” technology corporations to report its results, so the outcomes will probably be closely watched for signs of how the sector's huge spending on generative AI is translating into higher revenues.
Alphabet's capital spending rose again to $13 billion, up $1 billion from the previous quarter and nearly double the $6.9 billion it spent over the identical period in 2023. That reflects a rise in investments in data centers, latest chips to coach and run AI models, and the event of its own suite of AI products called Gemini.
“We are within the early stages of a really transformative space. When you undergo these transitions in technology, the chance of underinvesting is dramatically higher than the chance of overinvesting,” Pichai told analysts. “Not investing to be on the forefront of this has even greater downsides.”
Pichai claimed that Google's generative AI services for purchasers were already generating “billions” in latest revenue and were getting used by two million developers.
Still, Google got off to a rocky start in its efforts to integrate artificial intelligence into its products. When AI-generated synopses first appeared in U.S. search results, they told users that eating rocks may very well be healthy, advised them to stay cheese on their pizza and referred to former U.S. President Barack Obama as a Muslim.
These figures were released a day after Google abandoned its planned $23 billion acquisition of Israeli cybersecurity company Wiz, which might have been the biggest acquisition in its history.
Board members from each side had concerns about whether or not they would get approval from U.S. antitrust regulators, the Financial Times reported. When news of the advanced talks leaked out, skeptics stepped up their lobbying against the deal, ultimately derailing it.
Chief Financial Officer Ruth Porat declined to comment on the explanations for the failure of the talks, but said Google would proceed to look for methods to diversify its portfolio “if we discover the appropriate combination of things, including value.”
“Regulatory scrutiny is nothing latest for us and we’ve got successfully managed regulatory reviews of many large transactions prior to now,” she added.
The company announced that it will pay a dividend of 20 cents per share within the second quarter, price about $2.5 billion. The payout follows the primary dividend that Google paid earlier this 12 months, breaking with the corporate's previous policy of only using share buybacks to return money to investors.
Porat added that Google will invest one other $5 billion in its self-driving taxi service Waymo, which recently expanded its operations from San Francisco to Phoenix, Los Angeles and Austin.
