Alphabet Beats Q2 Revenue and Profit Estimates, Driven by Ad Sales and Cloud Services

July 24, 2024 at 8:16:36 AM - Trending 🔥

TL;DR Alphabet beat second-quarter revenue and profit estimates, driven by digital ad sales and cloud computing demand. Ad sales rose 11% to $64.6 billion, cloud revenue increased 28.8% to $10.35 billion, and net income grew 28.6% to $23.6 billion. Despite high capital expenditures, results highlight strong demand for digital ads and AI. Total revenue grew 14% to $84.74 billion, with YouTube ad sales up 13%. Alphabet plans significant investments in AI.

Alphabet Beats Q2 Revenue and Profit Estimates, Driven by Ad Sales and Cloud Services

Alphabet, Google's parent company, exceeded second-quarter revenue and profit expectations, driven by increased digital advertising sales and strong demand for cloud computing services. Despite this success, the company indicated that capital expenses would remain high throughout the year.

Financial Highlights for Alphabet Q2 FY24

Advertising Sales: Increased by 11% to $64.6 billion, largely due to events like the Paris Olympics and various elections.
Net Income: Rose 28.6% to $23.6 billion, surpassing the average estimate of $22.9 billion.
Total Revenue: Grew 14% to $84.74 billion, exceeding analysts' consensus estimate of $84.19 billion.
YouTube Ad Sales: Rose 13% to $8.67 billion.
Cloud Computing Revenue: Increased by 28.8% to $10.35 billion, beating the expected $10.16 billion.

Initially, Alphabet's shares rose by about 2% but later dipped by a similar percentage. The shares had already gained more than 30% this year, outperforming the Nasdaq Composite Index's 20% rise.

Capital Expenditures

Reported at $13 billion for the June quarter.
Expected to be at or above $12 billion for the rest of 2024.

AI and Technology

Strong adoption of generative artificial intelligence technology boosted the cloud business. Despite some embarrassing AI search results, Alphabet plans to expand AI use cases and potentially drive revenue through AI products.

Acquisitions and Regulatory Scrutiny

Alphabet had been pursuing a $23 billion acquisition of cybersecurity firm Wiz, which was eventually called off.
Talks to acquire HubSpot also fell through, which would have positioned Alphabet against competitors like Salesforce and Oracle.
Google decided to retain third-party cookies in its Chrome browser, reversing its previous stance due to advertiser concerns.

Other Ventures

Revenue from "other bets," including Waymo, rose 28% to $365 million. A multi-year $5 billion investment in Waymo is planned, as rival Cruise recovers from a publicized accident.

Conclusion

Alphabet's strong performance in digital advertising and cloud computing underscores robust market demand, despite high capital expenditures and mixed investor reactions. The company continues to focus on AI advancements and strategic investments in other ventures.