Google Confident About AI

Alphabet shares rose nearly 7% after the company posted excellent second quarter earnings of $1.44 per share against the street consensus $1.34. Revenue was $74.6 billion against a $72.82 billion expectation.

For the fourth straight quarter, Google’s parent company reported growth in the single digits as it reckons with a pullback in digital ad spending that reflects concerns about the economy. Second-quarter revenue rose 7% to $74.6 billion from $69.7 billion in the year-earlier period.

Revenue in Google’s cloud unit, which includes infrastructure and productivity apps, increased 28%. The division, which turned profitable on an operating basis in the first quarter, reported operating income in the second period of $395 million after losing $590 million a year earlier.

Google’s ad revenue rose 3.3% to $58.14 billion, up from $56.29 billion last year. YouTube ads came in above analyst expectations at $7.67 billion, up from $7.34 billion the year before. The video platform has faced heightened competition from TikTok in short-form videos.

AI Keeps Growing

“There’s exciting momentum across our products and the company, which drove strong results this quarter. Our continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search, and improving all our services. With fifteen products that each serve half a billion people, and six that serve over two billion each, we have so many opportunities to deliver on our mission,” said Alphabet and Google CEO Sundar Pichai.

The company is expanding its investments across multiple AI related products. Recently, Google announced development of a tool for news publishers that can generate article text and headlines.

“Our goal is to give journalists the choice of using these emerging technologies in a way that enhances their work and productivity,” a Google spokesperson said, “just like we’re making assistive tools available for people in Gmail and in Google Docs.”

The effort was first reported by The New York Times, which said the project is referred to internally as “Genesis” and has been pitched to The Times, The Washington Post and News Corp, which owns The Wall Street Journal.

And Google co-founder Sergey Brin, Alphabet’s second-largest individual shareholder, has recently been working with researchers at headquarters about three or four days a week on Gemini, its next big AI system, The Wall Street Journal reported last week.

Management Changes

Google Chief Financial Officer Ruth Porat will become president and chief investment officer of parent company Alphabet, ending an eight-year run during which she helped pitch the company to Wall Street.

Porat will begin the role in September and will continue to serve as CFO until Alphabet chooses her successor, the company said. She will be responsible for Alphabet’s investments in units like the self-driving car company Waymo in the new position and report to Chief Executive Sundar Pichai.

In an interview on Tuesday, Porat said she was ready to move to a new position after working in CFO roles for 14 years.

“I thought it was the right time to take on a different set of challenges, discussed the need for a new role with Sundar, and it goes right to what I love to do,” Porat said.

The shake-up, announced following a quarter in which Alphabet exceeded almost all key analyst expectations, comes after a tough stretch for management. Alphabet announced the largest layoffs in company history in January, and some investors have pressed Porat to cut costs even further.