New Delhi: Google’s parent company, Alphabet, surprised Wall Street with outstanding second-quarter earnings, exciting investors and driving up the price of the firm’s stock by 8% in after-hours trade. The strong performance was attributed to rising advertising income and consistent demand for Alphabet’s cloud services.
Ruth Porat, the organization’s longtime CFO, will move into a new position after being instrumental in supervising Alphabet’s phenomenal expansion since her hiring in 2015. She will take over as President and Chief Investment Officer effective September 1. She will also be in charge of 2024 planning during this time as the business looks for a replacement for her position as finance head.
Porat’s new duties will include managing Alphabet’s “Other Bets” portfolio, which entails investigating more avant-garde and riskier hardware and services businesses. She will also be crucial in overseeing the company’s international investments.
The advertising landscape has heavily impacted the company’s profitability, and the move in advertisers’ spending to more reputable platforms like Google has increased Alphabet’s income. Similar outcomes were seen in Meta Platforms, formerly known as Facebook, whose shares increased by as much as 2% after the announcement of their encouraging results. But applying such cutting-edge AI technology has a price.
Generative artificial intelligence software development is one key area of expansion for Alphabet. This cutting-edge technology is anticipated to lead to the next Big Tech innovation. The business improved its search engine by introducing generative AI, and it debuted AI products at its annual I/O developer conference in May.
In the second quarter, a substantial portion of Alphabet’s capital spending was allocated to servers and a “meaningful investment” in AI computing, as stated by CFO Ruth Porat during a conference call.
“Not only did Google deliver fantastic earnings per share, exceeding expectations at a time when investors were questioning its ability to keep up with other tech giants amid the AI frenzy, it also did so by a considerable margin. This strongly indicates that a new growth phase for the giant is likely underway,” Thomas Monteiro, senior analyst at Investing.com said.
During a conference call with investors, Sundar Pichai, the CEO of Alphabet, announced that the company’s redesigned, AI-powered search will incorporate advertising. The company is aggressively experimenting with different ad locations and layouts within its AI-powered search, indicating an impending change in its marketing approach.
As the company continues to invest in AI, its cloud business also saw considerable growth. Revenue at Google Cloud, one of the leading cloud service providers, rose by 28 per cent to $8.1 billion, surpassing expectations. Analysts anticipate further growth in cloud business towards the end of the year as macro uncertainties begin to clear.
Investors are particularly optimistic about AI’s potential to become a major driver of growth for cloud businesses in the coming year, with Microsoft’s Azure leading the way, followed closely by Amazon’s AWS and Google Cloud.
