Matthew Keegan
Jul 24, 2024

Alphabet beats Q2 earnings predictions

The tech giant and parent of Google has beaten Q2 revenue and profit estimates driven by strong ad sales and its cloud unit, and says that its AI investments are “driving new growth.”

Alphabet beats Q2 earnings predictions
Google’s parent company, Alphabet, has beaten second-quarter revenue and profit estimates owing to a rise in digital advertising sales and a healthy demand for its cloud computing services. 
 
Total revenue increased by 14% to $84.74 billion, beyond the $84.19 billion analysts had projected. Meanwhile, net income saw a 28.6% increase to $23.6 billion, exceeding Wall Street’s expectation of $22.7 billion.
 
Alphabet's primary income stream, advertising sales, increased 11% to $64.6 billion. The company sells ads in its search product using customer data to better target them.
 
The Paris Olympics and elections in many countries, including the US, have created a strong demand for digital advertisements, as demonstrated by the results. Meanwhile, its software business is growing due to an increase in enterprise spending.
 
Despite falling somewhat short of projections, ad sales in Alphabet's YouTube division rose 13% to $8.67 billion (against analyst estimates of $8.93 billion) over the previous year thanks primarily to direct response and brand advertising.
 
Cloud computing services revenue increased over $10 billion for the first time, rising 28.8% to $10.35 billion. $10.16 billion was what analysts had predicted. Its cloud business was driven by a strong adoption of gen AI technology.
 
 
The company has incorporated gen AI into all of its products and increased spending in the area, but its AI offerings have not been without stumbles. There was a botched roll out of Google's Gemini AI image-generator tool earlier this year that sparked a fierce backlash and prompted top officials to retract their statements after users discovered that the tool had placed people of colour in historically inaccurate roles, such as German troops in World War II.
 
Nevertheless, Alphabet's CEO, Sundar Pichai, said on a conference call following the earnings results that AI efforts were "driving new growth."
 
“Year-to-date, our AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenues and are being used by more than two million developers,” he said. He added that the company was “seeing great progress with AI Overviews,” which are answer summaries featured in search results.
 
However, AI Overviews have also been criticised by users who discovered several radically incorrect findings, such as suggestions that people eat rocks, as well as by publishers who claimed that it would decrease traffic to their websites.
 
On Monday, the cybersecurity start-up Wiz turned down Google's $23 billion buyout offer after deciding to go public instead, which was a blow to the company's hopes for growing its cloud computing business.
 
Meanwhile, Google announced on Monday that, after years of promises to phase them out, it will continue to allow third-party cookies in its Chrome browser backtracking function. It was a significant turnaround following worries raised by advertisers that their capacity to gather and process data for customised adverts would be restricted by the removal of cookies, leaving them reliant on Google's user databases.
 
Source:
Campaign Asia

Related Articles

Just Published

15 hours ago

Chinese media rebate corruption probe widens across ...

EXCLUSIVE: Dentsu Media CEO Tommy Li has stepped down and was reportedly in police custody, as China’s media rebate probe expands with as many as 30 people questioned. Former Wavemaker chief client officer Julep Lin has also been arrested in connection with the investigation.

2 days ago

Agency Report Cards 2024: We grade 25 APAC networks

The grades are in for Campaign Asia's 22nd annual evaluation of APAC agency networks. Subscribe to read our detailed analyses.

2 days ago

Agency Report Card 2024: Initiative

After losing marquee clients Amazon and Lego, Initiative faces an uphill battle to rebuild its reputation, leaning on new tools, a "challenger" mindset, and a focus on e-commerce to stay competitive in a rapidly shifting industry.

2 days ago

Global CEO of WPP Media’s Nexus departs

Bidon has been global chief executive at Nexus since April 2022.