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Alphabet, the parent company of Google, reported a significant 28.6% increase in profits for the second quarter of 2024, despite facing a $2.3 billion loss from its artificial intelligence (AI) research division. The company’s Q2 earnings revealed a net income of $23.6 billion and revenue of $84.7 billion, surpassing Zacks Investment Research’s projections by over $14 billion.

The reported loss from what Alphabet terms “Alphabet-level activities” rose sharply from $1.2 billion in Q2 2023 to $2.3 billion in Q2 2024. These activities primarily encompass AI-focused research and development, including the costs associated with AI models and other corporate expenditures. Key contributors to this spending are Google’s DeepMind and Google Research, which are exploring innovative ways to integrate AI into the company’s advertising and cloud services.

Sundar Pichai, Alphabet’s CEO, highlighted the continued strong performance in search and the notable advancements in the cloud sector during the company’s Q2 earnings call. He pointed out that the cloud business achieved a milestone by exceeding $10 billion in revenue for the first time, with an operating profit of $1 billion for the quarter. Pichai emphasized the significant contributions from Alphabet’s AI infrastructure and generative AI solutions, which have already generated billions in revenue and are utilized by over two million developers.

In Q2, Alphabet’s revenue increased by 14% compared to the same period last year, with a substantial portion of this income derived from Google and YouTube advertisements. On July 23, shares of Alphabet Inc Class A (GOOGL) remained stable before dropping over 2% following the release of the financial statement. Despite this decline, GOOGL has risen 31.5% in 2024, outperforming tech giants like Microsoft (20%), Apple (21.1%), and Amazon (24.3%).

However, Nvidia has been the standout performer in the tech sector this year. The GPU chipmaker’s stock surged 154.5% in 2024, at one point briefly surpassing both Apple and Microsoft to become the most valuable company globally.

Major Points:

  • Alphabet reported a 28.6% year-over-year increase in profits for Q2 2024, despite a significant loss in its AI division.
  • The company posted $23.6 billion in net income and $84.7 billion in revenue, exceeding estimates by over $14 billion.
  • Losses from “Alphabet-level activities,” primarily related to AI research, doubled to $2.3 billion compared to Q2 2023.
  • Alphabet’s cloud business surpassed $10 billion in revenue for the first time, contributing a $1 billion operating profit.
  • GOOGL shares rose 31.5% in 2024, outperforming other major tech stocks, but trailing behind Nvidia’s 154.5% gain.

James Kravitz – Reprinted with permission of Whatfinger News