Google's AI push pays off with solid second quarter, but doubts about company's future persist

Yahoo

5 days ago

SAN FRANCISCO (AP) — Google's accelerating shift into artificial intelligence helped propel its corporate parent to another quarter of solid growth while a crackdown on its internet empire looms in the background.
The results released Wednesday for the April-June period provided the latest sign that Google is deftly navigating the technological landscape's tilt toward AI while still capitalizing on well-worn techniques that have made it the internet's main gateway for the past quarter century.
That balancing act helped Google parent Alphabet Inc. earn $28.2 billion, or $2.31 per share, during the second quarter, a 19% increase from the same time last year. Revenue climbed 14% from a year ago to $96.4 billion. Both figures easily eclipsed analysts' projections.
'We had a standout quarter, with robust growth across the company," Alphabet CEO Sundar Pichai said. 'We are leading at the frontier of AI and shipping at an incredible pace. AI is positively impacting every part of the business, driving strong momentum.'
The numbers were initially overshadowed by a disclosure that Alphabet is increasing this year's budget for capital expenditures by $10 billion to $85 billion as part of its effort to fend off intensifying competition from AI startups such as OpenAI's ChatGPT and Perplexity. Besides those threats, a federal judge who declared Google's search engine to be an illegal monopoly is now weighing a range of countermeasures that include requiring the sale of its popular Chrome browser. Alphabet's shares dipped 1% in extended trading after the quarterly report came out.
After initially dipping following the disclosure about the rising costs of AI, Alphabet's stock price rebounded and rose by more than 1% in extended trading.
The performance covered a stretch that saw Google bring even more AI technology into its search engine in an effort to maintain its dominance, including the May release of its own version of a conversational answer engine called AI Mode.
That addition supplemented its more than year-old use of extensive summaries called AI Overviews that Google now frequently highlights at the top of its results page while decreasing the number of its traditional links to other websites.
The shake-up has resulted in even more interaction with Google's search engine and steady earnings growth to support Alphabet's $2.3 trillion market value, said Jim Yu, chief executive of BrightEdge, a firm that analyzes search trends.
Google's search-driven ad revenue totaled $54.2 billion in the past quarter, a 12% increase from the same time last year.
'All this AI stuff is not slowing Google down, they are doing a very good job of evolving with the times,' Yu said.
The AI boom has also been fueling demand in Google's Cloud division that sells computing power and other services. Google Cloud continued to thrive in the past quarter with revenue rising 32% from a year ago to $13.6 billion. The division is under pressure to deliver robust growth from investors to help justify Google's huge investments in AI technology.