Google’s AI push pays off with solid second quarter, but doubts about company’s future persist
SAN FRANCISCO (AP) — Google’s accelerating shift into artificial intelligence helped propel its corporate parent to another quarter of solid growth while a crackdown on its internet empire looms in the background.
The results released Wednesday for the April-June period provided the latest sign that Google is deftly navigating the technological landscape’s tilt toward AI while still capitalizing on well-worn techniques that have made it the internet’s main gateway for the past quarter century.
That balancing act helped Google parent Alphabet Inc. earn $28.2 billion, or $2.31 per share, during the second quarter, a 19% increase from the same time last year. Revenue climbed 14% from a year ago to $96.4 billion. Both figures easily eclipsed analysts’ projections.
“We had a standout quarter, with robust growth across the company. We are at the leading frontier of AI,” Alphabet CEO Sundar Pichai boasted.
But Google’s aggressive push into AI is forcing Alphabet to dig even deeper into its coffers to pay for the data centers, chips and other components required to power the technology, prompting the Mountain View, California, company to raise its budget for capital expenditures by an additional $10 billion to $85 billion.
That spending increase disclosed in the quarterly report initially spooked investors, causing Alphabet’s stock to dip in Wednesday’s extended trading, despite the financial gains that appear to be flowing from the AI investments. But as Alphabet executives elaborated on Google’s AI progress and made other reassuring remarks during a Wednesday conference call, the stock price reversed course and rose by more than 2% in extended trading.
Google is upping the ante as part of its effort to fend off intensifying competition from AI startups such as OpenAI‘s ChatGPT and Perplexity. Besides those threats, a federal judge who declared Google’s search engine to be an illegal monopoly is now weighing a range of countermeasures that include requiring the sale of its popular Chrome browser.
The performance covered a stretch that saw Google bring even more AI technology into its search engine in an effort to maintain its dominance, including the May release of its own version of a conversational answer engine called AI Mode.
That addition supplemented its more than year-old use of extensive summaries called AI Overviews that Google now frequently highlights at the top of its results page while decreasing the number of its traditional links to other websites.
The shake-up has resulted in even more interaction with Google’s search engine and steady earnings growth to support Alphabet’s $2.3 trillion market value, said Jim Yu, chief executive of BrightEdge, a firm that analyzes search trends.
