AI and Cloud Push Google/Alphabet 2Q Earnings Beyond Wall Street Forecast

Reports of Google's demise at the hands of AI bots appears to have been exaggerated. Again. Especially since AI and Google Cloud led Google to surpass Wall Street's expectations for the second quarter in a row. 

The reality is that Google Search remains in a strong position and has worked hard and fast to adapt AI as a tool, reinforcing its dominance. This continues to support the emergent narrative that AI is tending to make the Big Tech rich even richer rather than threatening them in the way that many previous tech evolutionary developments scuppered some of their predecessors. Google remains a major force to be reckoned with in the AI era and that does not appear to be about to change. JL  

Hannah Parker reports in Quartz:

Google parent Alphabet  posted earnings per share of $2.31 on $96.4 billion revenue, surpassing Wall Street’s projections for the second straight quarter. Alphabet’s AI and cloud computing investments proved to be major revenue drivers this quarter. The tech company cited “double-digit growth” from Google Search, YouTube ads, Google subscriptions, platforms, and devices, and Google Cloud. Google Services delivered $82.5 billion in revenue, up 12% year-over-year, while Google Cloud brought in $13.6 billion in revenue, a 32% increase. “AI is positively impacting every part of the business, driving strong momentum. Search delivered double-digit revenue growth."

Google parent Alphabet beat analysts’ expectations in second-quarter earnings released Wednesday after markets closed.

 

The tech giant posted an earnings per share of $2.31 on $96.4 billion revenue, surpassing Wall Street’s projections for the second straight quarter. The results show an increase in revenue from $90.2 billion but a drop in EPS from $2.81 compared to last quarter’s earnings. 

 

Zacks Investment Research projected on Friday that Alphabet would report an earnings per share of $2.14, which would be up 13.2% year-over-year, and sales of $79.25 billion, up 11.1% year-over-year. Alphabet’s reported earnings have outpaced Zacks’ projections for the previous four quarters.   

Charley Blaine at The Street said Monday that Alphabet was expected to post an earnings per share of $2.16, showing an increase of 14.3% from last year, plus revenue of $87.9 billion, up 3.8%. Blaine added that Alphabet’s shares are down 2.2% this year and “analysts will surely want to know how much — and when — all the investments will start to flow to the bottom line.”  

Analysts were mostly focused on getting updates on Alphabet’s AI and cloud computing investments, which proved to be major revenue drivers this quarter. 

The tech company cited “double-digit growth” from Google Search, YouTube ads, Google subscriptions, platforms, and devices, and Google Cloud. 

Google Services delivered $82.5 billion in revenue, up 12% year-over-year, while Google Cloud brought in $13.6 billion in revenue, a 32% increase.

Alphabet CEO Sundar Pichai said the company had a “standout quarter” citing “robust growth” across businesses. 

"We are leading at the frontier of AI and shipping at an incredible pace,” Pichai said in a release. “AI is positively impacting every part of the business, driving strong momentum. Search delivered double-digit revenue growth, and our new features, like AI Overviews and AI Mode, are performing well.”

Pichai added that Google Cloud had strong growth in revenue, revenues, backlog and profitability, noting that its annual revenue run-rate is now more than $50 billion. “With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures in 2025 to approximately $85 billion and are excited by the opportunity ahead,” he said.

Alphabet’s stock closed at $191.51, down from Tuesday’s close of $192.11, before the company released its earnings for this quarter, according to MarketWatch.