Google parent company Alphabet beat analysts’ expectations on Tuesday, reporting second-quarter earnings of $1.89 per share, the same as its first-quarter results.
Alphabet Chief Executive Sundar Pichai touted the results as proof that the company’s investments across different areas of its tech empire were yielding positive returns.
“Our strong performance this quarter highlights continued strength in search and momentum in the cloud. We are innovating at every layer of the AI stack,” Pichai said in the earnings call. “Our long-standing leadership in infrastructure and our internal research teams position us well as technology evolves and we take advantage of the many opportunities ahead.”
The company reported revenue of $84.7 billion, up 14% from the same period last year, which Chief Financial Officer Ruth Porat attributed to growth in search and cloud services.
On Tuesday morning, a long-negotiated deal between Alphabet and cybersecurity company Wiz fell through. Alphabet was in talks to acquire the Israeli company for $23 billion, but Wiz opted to reject the takeover offer and pursue an initial public offering. The deal would have been Alphabet’s largest acquisition in its history and an attempt to compete with cloud-based services from Amazon and Microsoft.
Google also reported positive first-quarter earnings results as well as a $70 billion share buyback, boosting investor confidence in the tech giant. Despite several rounds of layoffs and a looming decision in the Justice Department’s landmark antitrust trial, Alphabet’s share price rose about 24% of its total value in the first six months of the year.
The company’s most significant stock drop this year followed its failed launch of the Gemini AI imaging tool, which sparked fears among investors Gemini’s imagery tool sparked a backlash and forced top executives to backtrack after users discovered the tool inserted people of color into ahistorical situations, such as depicting them as German soldiers from World War II.
Despite its stumbles with Gemini, Google redoubled its efforts to showcase its AI investments during its annual developer conference in May. The company debuted a variety of AI-related features and tools, most notably its attempt to revamp Google Search through the widespread rollout of AI Overviews (short snippets of text summarizing articles and search results). AI Overviews faced backlash from both publishers who argued it would reduce traffic to their sites, and derision from users who found a number of wildly inaccurate results like the advice that people eat stones.
On Tuesday’s earnings call, Pichai touted the company’s foray into artificial intelligence, saying the company was “exceptionally well positioned for the AI opportunity ahead.” He added that listings above or below AI Overviews were generating positive engagement, while saying the company would lean more heavily into AI-enabled search services.
Big tech stocks fell in the week leading up to Alphabet’s earnings release as investors focused elsewhere in the market amid a range of concerns about the industry’s future. Alphabet’s earnings report is the first in a group that includes Apple, Amazon, Meta and other major tech companies.