Google parent Alphabet posted a 28.6% year-on-year profit boost in Q2 2024, despite a $2.3 billion loss from its AI research division. The company’s AI investments, particularly in Google’s DeepMind and Google Research, have driven growth in its advertisement and cloud businesses.
Points
- Alphabet reports a 28.6% profit increase in Q2 2024
- $2.3 billion loss from AI research division
- Net income of $23.6 billion and revenue of $84.7 billion
- AI investments drive growth in advertisement and cloud businesses
- Alphabet’s cloud business tops $10 billion in revenue for the first time
Alphabet, the parent company of Google, has reported a significant 28.6% year-on-year boost in profits for the second quarter of 2024. This impressive performance comes despite a $2.3 billion loss from its AI research division. According to the Q2 earnings filing, Alphabet achieved a net income of $23.6 billion and revenue of $84.7 billion, surpassing Zacks Investment Research’s estimate by over $14 billion.
The reported loss from “Alphabet-level activities,” which primarily includes AI-focused shared research and development activities and development costs of AI models, nearly doubled from $1.2 billion in Q2 2023 to $2.3 billion. Despite this, the company’s AI initiatives have driven substantial growth in its advertisement and cloud businesses.
Alphabet’s CEO, Sundar Pichai, highlighted the ongoing momentum in search and the significant progress in the cloud sector during the company’s Q2 earnings call. He noted that Alphabet’s cloud business topped $10 billion in revenue for the first time, producing a $1 billion operating profit for the quarter.
Alphabet’s AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenue and are being used by more than two million developers. The company’s revenue in Q2 was 14% higher than the same period last year, with the majority of revenue coming from Google and YouTube advertisements.
Shares in Alphabet Inc Class A （GOOGL） remained flat on July 23 but fell over 2% after the firm released its financial statement. Despite this, GOOGL is up 31.5% so far in 2024, outperforming major tech giants like Microsoft （MSFT）, Apple （AAPL）, and Amazon （AMZN）. However, all three stocks trail behind GPU chipmaker Nvidia’s （NVDA） performance, which increased by 154.5% in 2024 and briefly surpassed Apple and Microsoft as the world’s most valuable company last month.
解説
- Strong financial performance: Alphabet’s significant profit increase and revenue growth highlight its robust financial health and strategic investments.
- AI investments: Despite substantial losses in the AI research division, Alphabet’s focus on AI has driven growth in other sectors, particularly in advertisements and cloud services.
- Cloud business growth: Alphabet’s cloud business reaching over $10 billion in revenue for the first time signifies the growing importance and profitability of cloud services.
- Market performance: GOOGL’s strong performance in 2024 underscores investor confidence and the company’s ability to compete with other tech giants.