San Francisco Google parent Alphabet delivered another consecutive quarter of solid growth amid an AI-driven transformation of the ubiquitous search engine that is the foundation of its internet empire.
Google is still working to woo advertisers since May, when it foregoed its traditional display of related links to other websites and introduced artificial intelligence features that provide conversational responses to users’ search queries, according to its second-quarter report released Tuesday.
The change has sparked fear and anger among online publishers who worry their traffic will plummet, but Google is still thriving and propelling Alphabet’s success.
“AI is expanding the types of questions we can answer,” Alphabet CEO Sundar Pichai told analysts on a conference call on Tuesday, as he repeatedly praised AI as a technology he hopes will transform society and make Google a better company.
Alphabet’s revenue rose 14% year over year to $84.74 billion in the second quarter. The Mountain View, California company earned $23.62 billion, or $1.89 a share, up 29% from the same period a year ago. This marks the fourth consecutive quarter that Alphabet has seen year-over-year revenue growth exceed 10%, although the April-June quarter saw a slight slower pace than the January-March quarter.
The company’s most recent quarterly results beat analyst expectations, who guide investors, according to FactSet Research.
“While a far cry from last quarter’s explosive growth, these numbers leave no doubt that Alphabet remains a thriving revenue growth machine,” said Investing.com analyst Thomas Monteiro.
Alphabet’s shares tumbled and rose slightly in extended trading after the report was released. The stock is already up 30% this year, buoyed in large part by hopes for lucrative opportunities from the rise of AI, a field Google is trying to pioneer through its DeepMind division and Gemini technology.
Google’s cloud computing division, which manages the data centers needed to power its AI capabilities, is also benefiting from the boom. Google’s fastest-growing division brought in $10.3 billion in revenue last quarter, up 29% from the same period a year ago. It’s the first time the cloud division has hit the $10 billion revenue mark in a single quarter.
“We are innovating at every layer of the AI stack,” Pichai said on the conference call.
Google was looking to buy cybersecurity specialist Wiz for $23 billion in a bid to attract more customers to its cloud computing division, but talks have fallen apart.
Google also abandoned another idea that could have reshaped its digital advertising system and the internet ecosystem: It dropped plans to let its popular Chrome browser automatically block third-party cookies — code that tracks web surfers to understand their interests. Pichai told analysts that Google decided it was best to continue to leave it up to Chrome users to decide whether to block third-party cookies in their browser settings.
Even as it gains momentum financially and AI-wise, Google is still awaiting a ruling in a high-profile antitrust lawsuit brought by the U.S. Department of Justice aimed at weakening the power of its search engine. A federal judge is expected to rule later this year after reviewing a mountain of evidence presented in the high-profile trial in Washington.
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