Google parent Alphabet reported a 28.6% year-on-year increase in profits for Q2 2024, despite a $2.3 billion loss from its AI research division. The company posted net income of $23.6 billion and revenue of $84.7 billion, surpassing Zacks Investment Research’s estimate by over $14 billion. The loss from “Alphabet-level activities” nearly doubled from $1.2 billion in Q2 2023 to $2.3 billion.
In an FAQ, Alphabet explained that “Alphabet-level activities” mainly involve AI-focused R&D and development costs for AI models, including spending through Google’s DeepMind and Google Research. These efforts aim to integrate AI into advertising and cloud services.
Alphabet CEO Sundar Pichai highlighted the significant momentum in search and progress in cloud computing, with AI driving new growth. He noted that Alphabet’s cloud business surpassed $10 billion in revenue for the first time, generating a $1 billion operating profit for the quarter.
“Our AI infrastructure and generative AI solutions for cloud customers have already brought in billions in revenue and are being utilized by over two million developers,” Pichai said during the Q2 earnings call.
Alphabet Q2 Earnings Surpass Estimates
Alphabet’s Q2 revenue was 14% higher than the previous year, with the majority coming from Google and YouTube advertisements.
Shares of Alphabet Inc Class A (GOOGL) were flat on July 23 before dropping over 2% following the release of its financial statement.
GOOGL is up 31.5% so far in 2024, outperforming Microsoft (MSFT) at 20%, Apple (AAPL) at 21.1%, and Amazon (AMZN) at 24.3%.
However, all three still lag behind GPU chipmaker Nvidia (NVDA), which has surged 154.5% this year and briefly surpassed Apple and Microsoft as the world’s most valuable company last month.