Google Group Alphabet benefits from search engine and cloud business

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Google's parent company Alphabet was able to significantly increase revenue in practically all areas of the Group in the past quarter. Almost all market observers' expectations were exceeded, with only YouTube's advertising revenue being slightly lower than forecast. Revenue drivers are the Google search engine and the cloud business, with the latter exceeding the billion-euro mark. At the same time, the Group announced that it would be investing several billion in Waymo, the specialist for autonomous vehicles.

In the second quarter of this year, Alphabet increased its total revenue by 14 percent year-on-year to 84.7 billion US dollars. The Group's operating profit even increased by 25.6 percent to 27.4 billion dollars, while the profit margin grew from 29 percent in the same period last year to 32 percent. The biggest jump, however, was in net profit, which rose by 28.6 percent year-on-year to 23.6 billion dollars. Google also grew last year with online advertising and cloud business.

Google advertising continues to account for the majority of the Group's revenue. Compared to the second quarter of the previous year, this has increased by 11 percent to 64.6 billion dollars. Part of this is advertising revenue from the YouTube video platform, which rose by 13 percent year-on-year to 8.7 billion dollars. However, according to CNBC, market observers had expected 8.9 billion dollars in this area.

Cloud revenue exceeds 10 billion dollars for the first time

Alphabet's revenue from the Google Cloud surpassed the 10 billion dollar mark for the first time in the past quarter. In a year-on-year comparison, this division of the Group increased by 28.8 percent and achieved a cloud turnover of 10.3 billion dollars. Here, operating profit almost tripled, breaking the billion-dollar mark for the first time. While the operating profit of the cloud business amounted to 395 million dollars last year, it is now 1.17 billion dollars.

This pleases Alphabet CFO Ruth Porat, who explains: "As we invest to support our biggest growth opportunities, we remain committed to creating investment capacity through our ongoing work to sustainably reshape our cost base."

Profits allow for AI investments

With higher operating profits, the Google Group was also able to more than offset increased investments in artificial intelligence. This area, such as Google DeepMind, is now part of the so-called "Alphabet-level activities", which continue to post losses. From 1.2 billion dollars in the previous year, this has recently almost doubled to 2.29 billion dollars. At the same time, the Group reduced the number of employees by 1.2 percent to 179,582 in the last quarter.

Alphabet CEO Sundar Pichai commented: "Our strong performance this quarter underscores our continued strength in search and momentum in the cloud. We are innovating at every level of the AI stack. Our long-standing infrastructure leadership and internal research teams are well positioned to drive technology development and capitalize on the many opportunities that lie ahead."

5 billion dollars for Waymo

Following the announcement of the business figures, CFO Porat confirmed further investments in the robotaxi provider Waymo in talks with investors and analysts. Over the next few years, the Group will invest 5 billion dollars in the autonomous vehicle specialist, which Tekedra Mawakana, co-CEO of Waymo, welcomed on X/Twitter. Waymo offers its robotaxi service in the metropolitan areas of Phoenix and San Francisco and, according to Sundar Pichai, counts 50,000 rides with paying customers per week.

Despite the good figures, the stock market reacted cautiously to Alphabet's quarterly results. The share price initially jumped slightly after the close, but ultimately closed down just under 2.2 percent.

(fds)