Google’s parent company, Alphabet, outperformed analysts’ expectations on Tuesday, reporting second-quarter earnings of $1.89 per share, the same as its first quarter results.
Alphabet’s CEO, Sundar Pichai, touted the results as proof that the company’s investments across different areas of its tech empire were seeing positive returns.
“Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud. We are innovating at every layer of the AI stack,” Pichai stated in the earnings report. “Our longstanding infrastructure leadership and in-house research teams position us well as technology evolves and as we pursue the many opportunities ahead.”
The company reported $84.7bn in revenue, up 14% from the same period last year, which its chief financial officer, Ruth Porat, attributed to growth in Search and Cloud services.
Earlier on Tuesday, a long-discussed deal between Alphabet and the cybersecurity firm Wiz fell through. Alphabet was in talks to acquire the Israeli company for $23bn, but Wiz opted to turn down the takeover bid and seek a public offering. The deal would have been Alphabet’s largest-ever acquisition and an attempt to rival Amazon and Microsoft’s cloud-based services.
Google also reported positive results in its first-quarter earnings, as well as a $70bn stock buyback, which buoyed investor confidence in the tech giant. Despite several rounds of layoffs and a decision looming in the Department of Justice’s landmark antitrust trial, Alphabet’s stock price rose about 24% of its total value in the first six months of the year.
The company’s most significant dip in stock this year followed its botched rollout of the Gemini AI image-generator tool, which led to investor fears over Google’s investments in artificial intelligence products. Gemini’s image tool caused heated backlash and forced top executives to backtrack after users found that the tool inserted people of color into ahistorical situations, such as depicting them as German second world war soldiers.
Despite its stumbles with Gemini, Google doubled down on showcasing its investments in AI during its annual developers’ conference in May. The company debuted a variety of AI-related features and tools, most notably its attempt to overhaul Google Search through the widespread release of AI Overviews – short pieces of text that summarize articles and search results. AI Overviews faced backlash both from publishers who argued that it would reduce traffic to their sites, as well as mockery from users who found a number of wildly inaccurate results such as advice that people eat rocks.
On Tuesday’s earnings call, Pichai touted the company’s move into artificial intelligence and stated the company was “uniquely well-positioned for the AI opportunity ahead”. He added that ads above or below AI Overviews were seeing positive engagement, while saying that the company would be leaning further into AI-enabled search services.
Big tech faced a slump in the week leading up to Alphabets results, as investors focused on other parts of the market amid a variety of concerns about the future of the industry. Alphabet’s earnings report is the first from a group that includes Apple, Amazon, Meta and other marquee tech companies.