Alphabet revenue jumps 24% as cloud growth accelerates on AI demand

Google parent Alphabet reported a 24% increase in second-quarter revenue, supported by accelerating growth in its cloud business and continued strength in search advertising.

Revenue rose to $119.8 billion in the April-June period from $96.4 billion a year earlier, exceeding analysts’ estimates. The result marked Alphabet’s 12th consecutive quarter of double-digit revenue growth.

Operating income increased 30% year-on-year to $40.8 billion, while the company’s operating margin expanded by two percentage points to 34%, according to the financial statement figures released late Wednesday.

Net income available to common shareholders surged 298% to $112.1 billion from $28.2 billion, while diluted earnings per share rose to $9.11 from $2.31.

The sharp increase in profit was primarily attributable to a $99 billion gain on Alphabet’s equity securities, rather than its core operations. The investment gains added $77.1 billion to net income and $6.26 to earnings per share, according to the company.

Google Services revenue, which includes search, YouTube, subscriptions, and devices, increased 15% to $94.5 billion.

Google Search and other advertising revenue climbed 17% to $63.3 billion, while YouTube advertising revenue rose 13% to nearly $11.1 billion.

Google Cloud recorded the strongest growth among the company’s main businesses, with revenue jumping 82% to $24.8 billion amid demand for enterprise artificial intelligence infrastructure, AI solutions, and other cloud services.

Cloud operating income more than tripled to $8.8 billion from $2.8 billion a year earlier, while the unit’s order backlog reached $514 billion.

Alphabet CEO Sundar Pichai said the company’s AI investments were “redefining what’s possible” across its businesses.

Pichai said nearly 90% of Fortune 100 companies were using Gemini Enterprise, while the Gemini application reached 950 million monthly active users. Gemini models are processing 22 billion application programming interface tokens per minute, he added.

The strong operating results were accompanied by another increase in spending on data centers, chips, and other AI infrastructure.

Alphabet’s quarterly capital expenditures more than doubled to $44.9 billion from $22.4 billion, causing free cash flow to fall to negative $5.9 billion.

The company raised its full-year capital expenditure forecast to between $195 billion and $205 billion, up from its previous projection of $180 billion to $190 billion, as demand for AI computing capacity continued to exceed available supply.