What happened
Shares of Alphabet (GOOG 1.16%) (GOOGL 1.32%) were moving higher after the tech giant topped estimates in its second-quarter earnings report last night. The Google parent posted accelerating growth in its digital advertising businesses, reassuring investors that the worst of the downturn was behind it. It also posted another profit in its Google Cloud division.
As of 11:09 a.m. ET, the stock was up 5.9% on the news.
Image source: Getty Images.
So what
Revenue in the quarter rose 7%, or 9% in constant currency, to $74.6 billion, which was well ahead of estimates at $72.8 billion. On the bottom line, earnings per share increased from $1.21 to $1.44, which beat expectations at $1.34.
After experiencing a decline in its advertising business in the first quarter, Alphabet's ad segment grew revenue 3.3% to $58.1 billion, with search revenue up 4.8%. YouTube returned to growth with a 4.4% increase in revenue. However, ad sales from Google Network, which includes partner websites, fell 5% to $7.9 billion.
Elsewhere, the company continued to deliver strong growth in its cloud computing business with revenue up 28% to $8 billion. The company also posted a $395 million profit in Google Cloud, reversing a loss from the year before.
Profits were helped by its decision to lay off roughly 12,000 employees earlier in the year and a change affecting the depreciation of its server and network equipment. This added $0.06 in earnings per share, or $748 million in net income, in the quarter.
CEO Sundar Pichai said: "There's exciting momentum across our products and the company, which drove strong results this quarter. Our continued leadership in AI [artificial intelligence] and our excellence in engineering and innovation are driving the next evolution of Search, and improving all our services."
Now what
Alphabet doesn't offer quarterly guidance, but the report seemed to reassure investors that the company was holding its own in the new generative AI race. The improving growth in search, which makes up a majority of the company's revenue, was a bright sign, as well.
Wall Street generally cheered the results. With the economy seemingly on the rebound, Alphabet's growth seems likely to continue to accelerate.
