Alphabet Stock Dips Despite Strong Q2 Results as Expenses Raise Concerns

Alphabet falls as expenses over shadow quarterly results beat

Alphabet's shares fell more than 3% in premarket trading on Wednesday after the Google-parent flagged higher expenses due to competition heating up in search and cloud computing.Alphabet's shares fell more than 3% in premarket trading on Wednesday after the Google-parent flagged higher expenses due to competition heating up in search and cloud computing. The company reported capital expenditures of $13 billion in the second quarter ending June. Ruth Porat, in her last conference call as Alphabet's chief financial officer, told investors that quarterly capital expenditures for the rest of 2024 would be at or above $12 billion. In the January-March period, Alphabet's capital expenditure had jumped 91% to $12 billion, spooking investors. "Alphabet is in the process of durably reengineering its cost base, with a focus on moderating expense growth and reallocating resources towards key AI initiatives," Wedbush analyst Daniel Ives said. Advertising sales, the company's chief revenue source, rose 11% to $64.6 billion in the second quarter, fueled by events such as the Paris Olympics and elections in multiple countries, including the United States. However, revenue from YouTube increased 13% to $8.67 billion, but fell short of Wall Street estimates. "The ongoing growth in CTV (connected TVs that can access the internet) and long-form digital video ad inventory may be impacting growth at YouTube ... we expect the trajectory of the segment will be an area of debate in the coming quarters," Wedbush analysts said. On the artificial intelligence front, Google expanded AI-powered summaries in Search and enhanced its Gemini AI model to better compete with rivals such as OpenAI and Microsoft. J.P.Morgan analysts noted that Google's Search strength could alleviate concerns about market share and chatbot competition. At least three brokerages raised their price targets on the stock, following results. Alphabet's 12-month forward price-to-earnings ratio stands at 22.2, compared with AI chip firm Nvidia's 38.6, according to LSEG data.

Alphabet falls as expenses overshadow quarterly results beat

(Reuters) - Alphabet's shares fell more than 3% in premarket trading on Wednesday after the Google-parent flagged higher expenses due to competition heating up in search and cloud computing. The company reported capital expenditures of $13 billion in the second quarter ending June. Ruth Porat, in her last conference call as Alphabet's chief financial officer, told investors that quarterly capital expenditures for the rest of 2024 would be at or above $12 billion. In the January-March period, Alphabet's capital expenditure had jumped 91% to $12 billion, spooking investors. "Alphabet is in the process of durably reengineering its cost base, with a focus on moderating expense growth and reallocating resources towards key AI initiatives," Wedbush analyst Daniel Ives said. Advertising sales, the company's chief revenue source, rose 11% to $64.6 billion in the second quarter, fueled by events such as the Paris Olympics and elections in multiple countries, including the United States. However, revenue from YouTube increased 13% to $8.67 billion, but fell short of Wall Street estimates. "The ongoing growth in CTV (connected TVs that can access the internet) and long-form digital video ad inventory may be impacting growth at YouTube ... we expect the trajectory of the segment will be an area of debate in the coming quarters," Wedbush analysts said. On the artificial intelligence front, Google expanded AI-powered summaries in Search and enhanced its Gemini AI model to better compete with rivals such as OpenAI and Microsoft. J.P.Morgan analysts noted that Google's Search strength could alleviate concerns about market share and chatbot competition. At least three brokerages raised their price targets on the stock, following results. Alphabet's 12-month forward price-to-earnings ratio stands at 22.2, compared with AI chip firm Nvidia's 38.6, according to LSEG data. (Reporting by Khushi Singh in Bengaluru; Editing by Shounak Dasgupta)

Alphabet falls as expenses overshadow quarterly results beat

Alphabet's shares fell more than 3% in premarket trading on Wednesday after the Google-parent flagged higher expenses due to competition heating up in search and cloud computing. The company reported capital expenditures of $13 billion in the second quarter ending June. Ruth Porat, in her last conference call as Alphabet's chief financial officer, told investors that quarterly capital expenditures for the rest of 2024 would be at or above $12 billion. In the January-March period, Alphabet's capital expenditure had jumped 91% to $12 billion, spooking investors. "Alphabet is in the process of durably reengineering its cost base, with a focus on moderating expense growth and reallocating resources towards key AI initiatives," Wedbush analyst Daniel Ives said. Advertising sales, the company's chief revenue source, rose 11% to $64.6 billion in the second quarter, fueled by events such as the Paris Olympics and elections in multiple countries, including the United States. However, revenue from YouTube increased 13% to $8.67 billion, but fell short of Wall Street estimates. "The ongoing growth in CTV (connected TVs that can access the internet) and long-form digital video ad inventory may be impacting growth at YouTube ... we expect the trajectory of the segment will be an area of debate in the coming quarters," Wedbush analysts said. On the artificial intelligence front, Google expanded AI-powered summaries in Search and enhanced its Gemini AI model to better compete with rivals such as OpenAI and Microsoft . J.P.Morgan analysts noted that Google's Search strength could alleviate concerns about market share and chatbot competition. At least three brokerages raised their price targets on the stock, following results. Alphabet's 12-month forward price-to-earnings ratio stands at 22.2, compared with AI chip firm Nvidia's 38.6, according to LSEG data. (Reporting by Khushi Singh in Bengaluru; Editing by Shounak Dasgupta)

Why Alphabet Stock Is Sinking Today | The Motley Fool

Alphabet published second-quarter results after the market closed yesterday. Despite strong sales and earnings beats in the quarter, investors are selling out of the stock in response to the company's forward guidance. Alphabet posted earnings per share of $1.89 on revenue of $84.74 billion in the second quarter. Meanwhile, the average analyst estimate had called for the business to record per-share earnings of $1.85 on sales of $84.29 billion. Even though the company's share price is dipping today, the company's Q2 results were very strong -- and most key segments put up impressive performances. Overall revenue rose 15% year over year on a currency-adjusted basis, and the company's operating income margin hit 32% -- up from the 29% margin it posted in last year's quarter and exceeding the 31% margin predicted by Wall Street. Alphabet's "Google search and other" segment saw revenue increase roughly 14% year over year to hit $48.5 billion. The company's cloud business also delivered another quarter of strong growth, with revenue rising roughly 29% year over year to hit $10.35 billion. Along with strong sales momentum for most of its segments, efficiency initiatives at the company helped push diluted earnings per share up roughly 31% compared to last year's quarter. While Alphabet's Q2 results were roundly better than Wall Street had anticipated, company management made comments on the quarterly earnings call that have triggered an uptick in bearish sentiment. Third-quarter operating margins will likely be pressured due to increases in depreciation and expenses related to the company's investment in artificial intelligence (AI) and other tech infrastructure. While margins could see some uneven movement in the near term, the long-term trajectory points to continued margin expansion for the company. Alphabet still expects that this year's operating margins will be up on an annual basis, and the software leader is likely still in the very early stages of benefiting from the AI revolution. With Alphabet now trading at roughly 23 times this year's expected earnings, shares look attractively valued given the company's sales and earnings momentum. If you're a long-term investor interested in building a position in the tech giant's stock, today's pullback appears to present a worthwhile buying opportunity.

Alphabet falls as expenses overshadow quarterly results beat

Alphabet's shares fell more than 3% in premarket trading on Wednesday after the Google-parent flagged higher expenses due to competition heating up in search and cloud computing. The company reported capital expenditures of $13 billion in the second quarter ending June. Ruth Porat, in her last conference call as Alphabet's chief financial officer, told investors that quarterly capital expenditures for the rest of 2024 would be at or above $12 billion. In the January-March period, Alphabet's capital expenditure had jumped 91% to $12 billion, spooking investors. "Alphabet is in the process of durably reengineering its cost base, with a focus on moderating expense growth and reallocating resources towards key AI initiatives," Wedbush analyst Daniel Ives said. Advertising sales, the company's chief revenue source, rose 11% to $64.6 billion in the second quarter, fueled by events such as the Paris Olympics and elections in multiple countries, including the United States. However, revenue from YouTube increased 13% to $8.67 billion, but fell short of Wall Street estimates. Alphabet's 12-month forward price-to-earnings ratio stands at 22.2, compared with AI chip firm Nvidia's 38.6, according to LSEG data.

Google stock is sinking because of high AI spending and sluggish YouTube performance

Google stock sank on Wednesday despite its parent company reporting booming profits and sales that beat Wall Street's expectations. Google shares sank 5% in morning trading. The reason: Google is spending more than expected on AI, and YouTube isn't doing so hot. Google's capital expenditures, driven by AI, totaled $13.2 billion, about $1 billion more than analysts polled by FactSet had expected. CEO Sundar Pichai was quick to defend Google's high spending to develop its AI. "Look, obviously we are at early stage of what I view as very transformative area...aggressively investing up front in a defining category," Pichai said in a call with investors late Tuesday. "The risk of underinvesting is dramatically greater than the risk of overinvesting for us here even in scenarios where if it turns out that we are overinvesting." He added, "We obsess around every dollar we put in." While Google executives emphasized YouTube's performance as strong, its ad sales grew less than expected. YouTube revenues increased 13% from last year, below Wall Street's forecast of 16%. Deutsche Bank's Ben Black said Google's overperformance in Search and Cloud was "offset" by YouTube's weak performance. Morgan Stanley analysts on Wednesday called the division's results "disappointing" and lowered its price target for Google's stock from $210 to $205. Bank of America lowered its revenue outlook for Google for the year given the YouTube results. But Wedbush's Dan Ives, who also noted the weak YouTube performance, said, "Still, we do not think softer growth at YouTube should overshadow the transformation underway within the company's core Search business." $13.2 billion: Google's capital expenditures, compared to the $12.3 billion Wall Street analysts polled FactSet had expected 13%: How much YouTube's second quarter revenue grew from last year, less than the 16% expected by analysts

Alphabet earnings up next with Google parent's AI costs in focus

Alphabet shares bumped higher in early Tuesday trading as investors looked to the tech giant's second-quarter earnings, slated for after the closing bell, to provide a key update on the billions it's spending to develop its AI-powered technologies. Alphabet, the parent of tech and ad giant Google, could see its capital spending rise to as high as $45 billion this year as it rolls out AI-themed products to support its core search business and expands its broader data center footprint to enhance sales from its Cloud division. That spending, however, raises concern that profit margins could narrow, potentially leaving investors to look elsewhere for mega-cap tech stock growth following a one-year gain of more than 50% for the Magnificent 7 stalwart. Google's capital spending hit $12 billion over the first three months of the year, a tally finance chief Ruth Porat said was "driven overwhelmingly by investment in our technical infrastructure " but also reflecting "our confidence in the opportunities offered by AI across our business." "Looking ahead, we expect quarterly capex throughout the year to be roughly at or above the Q1 level," she told investors in April. Alphabet's capital spending plans in focus Alphabet unveiled plans for its first-ever dividend and a $70 billion stock buyback following stronger-than-expected first-quarter earnings in April. These moves were seen at the time as an attempt to soften the blow of accelerated AI and capital spending plans. "While a negative surprise related to spending remains a risk for Alphabet (and all of megacap internet), we think the chances are relatively low this quarter, as the increased capital intensity is better understood and estimates for (depreciation) and CapEx have risen materially following guidance last quarter," said Wedbush analyst Dan Ives. Related: Analysts revamp Google parent stock price target into Q2 earnings One of the more immediate benefits of the AI spending spree is likely evident in Google's core search business, which could generate as much as $47 billion in revenues over the second quarter. Alphabet rolled out its "AI Overviews" tool earlier this spring. This add-on to its search function uses artificial intelligence and a customized language model to summarize results. "While still a nascent product, our sense is AI Overviews is encouraging more searches," said KeyBanc Capital Markets analyst Justin Patterson, who carries an 'overweight' rating with a $200 price target on Alphabet stock. "Over time, we believe this could lead to more targeted ads, which could support Search growth," he added. Google Cloud sees AI boost Cloud revenues are also set to benefit from the AI investment surge, with Google's Cloud division likely to report a 26.5% growth rate and a top line of around $10.16 billion, according to Wall Street forecasts. "We think the business is well positioned in 2Q and 2H as the bulk of cost optimization pressure appears to be behind the industry and AI monetization continues to drive incremental dollar growth," said Ives at Wedbush, who carries an 'outperform' rating with a $205 price target on Alphabet. Related: Analysts reboot Google parent stock price target ahead of earnings Google's AI push also adds heft to YouTube, which Patterson at KeyBanc sees generating revenues of around $9.14 billion. "We see YouTube sustaining high-teens revenue growth due to a brand advertising recovery and political ad spending cycle," Patterson said. More AI Stocks: A further pullback in ad spending on TikTok is providing a further boost after President Joe Biden signed legislation that gives China-based ByteDance, TikTok's parent, until January to divest its U.S. assets or face a complete ban in the world's largest economy. At the parent level, Alphabet is expected to post second-quarter earnings of $1.84 per share, a 27.7% improvement from the same period last year. Revenues are expected to rise 12.9% to $84.21 billion. Alphabet shares are trading near $183.70 on July 23. Related: Veteran fund manager sees world of pain coming for stocks

Google parent Alphabet beats Q2 revenue, profit estimates on strong ads, cloud

Alphabet saw Q2 growth in digital ads, cloud services, and AI, with $84.74 billion revenue and $23.6 billion net income. Capex is forecasted at $12 billion. AI rollout issues; deals with Wiz and HubSpot fell through. A $5 billion investment into Waymo. Google reversed its decision on third-party cookies amid regulatory scrutiny, stated Sundar Pichai.Alphabet beat second-quarter revenue and profit estimates on Tuesday, driven by a rise in digital advertising sales and healthy demand for its cloud computing services, but flagged that capital expenses would remain high for the year. Alphabet's results underscore robust demand for digital ads, driven by events like the Paris Olympics and elections in several countries including the U.S., while a recovery in enterprise spending is boosting its software business. Strong adoption of generative artificial intelligence technology drove its cloud business. Advertising sales, Alphabet's chief revenue source, rose 11% to $64.6 billion. The company sells ads in its search product using customer data to better target them. Net income in the quarter ended June 30 rose 28.6% to $23.6 billion, besting the average estimate of $22.9 billion. Investor reaction was mixed, with the shares initially rising about 2% before dipping by a similar percentage. They had gained more than 30% this year, outperforming a 20% rise in tech-heavy Nasdaq Composite Index. "This was another stellar quarter from Google with beats across the board," said Ido Caspi a research analyst with Global X, citing ad sales and artificial intelligence offerings as drivers. Total revenue grew 14% to $84.74 billion, compared with analysts' consensus estimate of $84.19 billion according to LSEG data. Ad sales in its YouTube division rose 13% to $8.67 billion. Revenue from cloud computing services, a widely watched barometer for the health of enterprise technology spending, rose 28.8% to $10.35 billion. Analysts had expected $10.16 billion. Alphabet reported capital expenditures of $13 billion in the June quarter. Ruth Porat, in her last conference call as Alphabet's chief financial officer, told investors that quarterly capital expenditures for the rest of 2024 would be at or above $12 billion. In the January-March period, the company's capital expenditure had jumped 91% to $12 billion, spooking investors. Like its competitors, Alphabet is racing to roll out AI offerings as investors continue to pour billions into the technology. But its AI searches have produced a series of embarrassing results , such as the widely ridiculed suggestion to put glue on pizza to better hold cheese. Google pulled back on the technology in May to work out kinks. The technology will be rolled out to more countries, Alphabet CEO Sundar Pichai told investors on a call on Tuesday. "You'll see us expand the use cases around it." Pichai, without providing a timeline, said AI products could soon drive revenue rather than just help companies through cost-cutting and greater efficiency. Despite heightened regulatory scrutiny, Google had been pursuing its largest acquisition ever, a roughly $23 billion buyout of cybersecurity firm Wiz. But Wiz told employees on Monday it was walking away from the deal and would instead pursue going public. Google also held talks to acquire customer relationship management firm HubSpot before walking away from it earlier this month. The deal would have turned Alphabet into a rival of Salesforce, Oracle and others in that market. Google said on Monday it is planning to keep third-party cookies in its Chrome browser backtracking function after years of pledging to phase out the tiny packets of code used to track internet searches. It marked a major reversal after advertisers expressed concerns that the loss of cookies would limit their ability to collect and parse information for personalizing ads, making them dependent on Google's user databases. Sales for the Mountain View, California company's so-called "other bets," including experimental projects and its self-driving car unit Waymo, rose 28% to $365 million. Porat said the company is planning a multi-year $5 billion investment in Waymo, as rival Cruise slowly maps a course back to U.S. roads after a highly publicized accident in October.

Alphabet results to set tone for big tech on advertising, cloud

Read: Big Tech Stock Slump Amps Up Pressure to Deliver on Earnings "This isn't the big acceleration quarter, but I think that they will do slightly better than consensus and give a good September guide," said Rhys Williams of Wayve Capital Management LLC, adding that Alphabet needs to "directionally talk about what AI is doing to their overall revenue stream." Alphabet shares are up about 0.5% in early trading on Tuesday. Wall Street analysts expect the company to report US$84.4 billion in revenue in the second quarter, a 13% jump from the same period last year but marking a deceleration from last quarter. Advertising, which includes the search and YouTube businesses, is expected to bring in $64.5 billion, up 11% compared with last year, helped by Google's AI improvements to search. The results, and Alphabet's guidance ahead of the Olympics and the November US Presidential election -- two major events that should benefit ad spending -- have read-through to companies including Meta Platforms Inc., Snap Inc. and Pinterest Inc. Bank of America's Justin Post expects the results to "set a positive backdrop" for peers. He recently boosted his second-quarter estimate for Alphabet's search business. "In the near-term, we think revenue upside from AI-driven monetization improvements will be a key 2Q takeaway," Post said. Analysts will also be watching Google's spending. Capital expenditure came in higher than expected last quarter, though Wedbush analysts led by Scott Devitt said that expectations for near-term capex have now "caught up to reality." "While a negative surprise related to spending remains a risk for Alphabet (and all of megacap internet), we think the chances are relatively low in 2Q," Devitt wrote. The company has spent significantly on developing AI services in its cloud business, which competes with Amazon.com Inc.'s AWS and Microsoft Corp.'s Azure. Cloud was one of the key factors behind Google's first quarter beat, and Truist analysts led by Youssef Squali expect this quarter's results to be supported by a sustained performance in cloud as well. A solid report from Alphabet on cloud would have positive implications for Amazon, Microsoft and even Nvidia Corp., as it may signal that investments in AI chips will need to continue through next year. Among other developments, this quarter will also mark the last before Anat Ashkenazi takes over as chief financial officer at the end of the month, replacing Ruth Porat. Investors will also be interested in M&A, after cybersecurity startup Wiz Inc. turned down a takeover bid from Google, according to a memo reported by Bloomberg today. Alphabet also recently shelved its pursuit of HubSpot Inc., a customer relationship management software maker, Bloomberg reported previously. "We are looking for more details around "efficiency" as the theme was more prevalent in the April call and perhaps the new CFO, Anat Ashkenazi, will look to cut a bloated structure even further," Melius Research analyst Ben Reitzes wrote in a recent note. Reitzes noted that Google shares have been strong since its first-quarter report amid optimism around "costs, cloud momentum and improvement in AI execution." "Management needs to show real commitment to these themes for the stock to keep going," he said.

Alphabet earnings: Key metrics focus on Google Cloud and ad revenue

Google's parent company, Alphabet, is set to report earnings after the US markets close today, providing insight into the health of its AI-led business. Alphabet posted impressive first-quarter earnings due to growth acceleration in its Google Cloud and advertising sales. Investors expect the company to unveil further innovations in its AI initiatives, an area in which Alphabet has heavily invested. Alphabet shares have risen 31% year-to-date, surpassing the Nasdaq Composite's 20% growth. In the first quarter, The overall revenue increased 15% from a year ago to $80.54 billion (€73.96 billion), with earnings per share of $1.89 (€1.74). Alphabet also approved its first-ever dividend and announced a $70 billion (€64 billion) share buyback programme. Alphabet demonstrated robust growth in both advertising sales and its Google Cloud business, up 13% and 28% year on year, to $61.66 billion (€56.62 billion) and $8.09 billion (€7.43 billion), respectively. Additionally, YouTube advertising showed continuous strength, contributing revenue of $8.09 billion. Analysts expect the tech giant to report earnings of $84.3 billion, representing a 13% growth from last year. The net income is expected to be $23 billion, with earnings per share of $1.85, reflecting a 28% annual increase, according to Visible Alpha. Alphabet has a history of beating earnings estimates in the past consecutive quarters, with earnings growth accelerating since 2023. Investors have high expectations for its second-quarter performance as the AI-supported development in Google Cloud may illustrate significant technological advancement. The AI-powered Google Cloud and advertising revenue, particularly from YouTube, remain key metrics of Alphabet's performance. Google invested $12 billion in AI infrastructure, primarily focused on data centres, during the first quarter. Investors would like to see this segment bring more growth prospects, as CEO Sundar Pichai expressed confidence in effectively managing the transition to monetisation following these substantial investments. In the first quarter, Alphabet nearly doubled its capital expenditures to $12 billion from a year earlier. The tech pioneer has set an ambitious target to achieve a combined Google Cloud and YouTube annual run rate of more than $100 billion by the end of 2024, an 85% surge from 2023. The operating income of Google Cloud increased to $900 million from $191 million a year earlier in the first quarter, evidencing that the massive investment has finally borne fruit. Google Cloud holds the third position in market share, trailing behind Amazon's AWS and Microsoft's Azure. Chief Financial Officer Ruth Porat expressed enthusiasm, stating: "The main thing is, we are excited about the benefit from AI for our cloud customers." At Google I/O, an annual developer conference, Google emphasised its chatbot tool as "Gemini Era", and unveiled an AI assistant called "Project Astra" that can be integrated into Gemini, enabling sound input and identifying vision via a smartphone camera. The initiative is seen as critical to competing with Microsoft's ChatGPT and Copilot. Cybersecurity firm Wiz called off a $23 billion (€21 billion) deal for being acquired by Alphabet on Tuesday, hours before the Google parent company reports its quarterly earnings. Wiz said it would pursue an initial public offering. Alphabet was reportedly in talks with Wiz earlier this month for the potential biggest deal ever. This could be a setback for Alphabet due to its heavy bets in building the AI infrastructure. The news also followed the largest-ever IT outage from cybersecurity giant CrowdStrike, causing broad disruption in TVs, air travel, and Microsoft's cloud services on last Friday.

Google parent Alphabet beats Q2 revenue, profit estimates on strong ads, cloud

Strong adoption of generative artificial intelligence technology drove its cloud business. Advertising sales, Alphabet's chief revenue source, rose 11% to $64.6 billion. The company sells ads in its search product using customer data to better target them. Net income in the quarter ended June 30 rose 28.6% to $23.6 billion, besting the average estimate of $22.9 billion. Investor reaction was mixed, with the shares initially rising about 2% before dipping by a similar percentage. They had gained more than 30% this year, outperforming a 20% rise in tech-heavy Nasdaq Composite Index. "This was another stellar quarter from Google with beats across the board," said Ido Caspi a research analyst with Global X, citing ad sales and artificial intelligence offerings as drivers. Total revenue grew 14% to $84.74 billion, compared with analysts' consensus estimate of $84.19 billion according to LSEG data. Ad sales in its YouTube division rose 13% to $8.67 billion. Revenue from cloud computing services, a widely watched barometer for the health of enterprise technology spending, rose 28.8% to $10.35 billion. Analysts had expected $10.16 billion. Alphabet reported capital expenditures of $13 billion in the June quarter. Ruth Porat, in her last conference call as Alphabet's chief financial officer, told investors that quarterly capital expenditures for the rest of 2024 would be at or above $12 billion. In the January-March period, the company's capital expenditure had jumped 91% to $12 billion, spooking investors. Like its competitors, Alphabet is racing to roll out AI offerings as investors continue to pour billions into the technology. But its AI searches have produced a series of embarrassing results, such as the widely ridiculed suggestion to put glue on pizza to better hold cheese. Google pulled back on the technology in May to work out kinks. The technology will be rolled out to more countries, Alphabet CEO Sundar Pichai told investors on a call on Tuesday. "You'll see us expand the use cases around it." Pichai, without providing a timeline, said AI products could soon drive revenue rather than just help companies through cost-cutting and greater efficiency. Despite heightened regulatory scrutiny, Google had been pursuing its largest acquisition ever, a roughly $23 billion buyout of cybersecurity firm Wiz. But Wiz told employees on Monday it was walking away from the deal and would instead pursue going public. Google also held talks to acquire customer relationship management firm HubSpot before walking away from it earlier this month. The deal would have turned Alphabet into a rival of Salesforce, Oracle and others in that market. Google said on Monday it is planning to keep third-party cookies in its Chrome browser backtracking function after years of pledging to phase out the tiny packets of code used to track internet searches. It marked a major reversal after advertisers expressed concerns that the loss of cookies would limit their ability to collect and parse information for personalizing ads, making them dependent on Google's user databases. Sales for the Mountain View, California company's so-called "other bets," including experimental projects and its self-driving car unit Waymo, rose 28% to $365 million. Porat said the company is planning a multi-year $5 billion investment in Waymo, as rival Cruise slowly maps a course back to U.S. roads after a highly publicized accident in October. (Reporting by Yuvraj Malik in Bengaluru; Editing by Devika Syamnath and Richard Chang)

Google parent Alphabet posts 29% jump in profit on digital ad...

Alphabet beat second-quarter revenue and profit estimates on Tuesday, driven by a rise in digital advertising sales and healthy demand for its cloud computing services, but flagged that capital expenses would remain high for the year. Alphabet's results underscore robust demand for digital ads, driven by events like the Paris Olympics and elections in several countries including the US, while a recovery in enterprise spending is boosting its software business. Strong adoption of generative artificial intelligence technology drove its cloud business. Advertising sales, Alphabet's chief revenue source, rose 11% to $64.6 billion. The company sells ads in its search product using customer data to better target them. Net income in the quarter ended June 30 rose 29% to $23.6 billion, besting the average estimate of $22.9 billion. Investor reaction was mixed, with the shares initially rising about 2% before dipping by a similar percentage. They had gained more than 30% this year, outperforming a 20% rise in tech-heavy Nasdaq Composite Index. "This was another stellar quarter from Google with beats across the board," said Ido Caspi a research analyst with Global X, citing ad sales and artificial intelligence offerings as drivers. Total revenue grew 14% to $84.74 billion, compared with analysts' consensus estimate of $84.19 billion according to LSEG data. Ad sales in its YouTube division rose 13% to $8.67 billion. Revenue from cloud computing services, a widely watched barometer for the health of enterprise technology spending, rose 28.8% to $10.35 billion. Analysts had expected $10.16 billion. Alphabet reported capital expenditures of $13 billion in the June quarter. Ruth Porat, in her last conference call as Alphabet's chief financial officer, told investors that quarterly capital expenditures for the rest of 2024 would be at or above $12 billion. In the January-March period, the company's capital expenditure had jumped 91% to $12 billion, spooking investors. Like its competitors, Alphabet is racing to roll out AI offerings as investors continue to pour billions into the technology. But its AI searches have produced a series of embarrassing results, such as the widely ridiculed suggestion to put glue on pizza to better hold cheese. Google pulled back on the technology in May to work out kinks. The technology will be rolled out to more countries, Alphabet CEO Sundar Pichai told investors on a call on Tuesday. "You'll see us expand the use cases around it." Pichai, without providing a timeline, said AI products could soon drive revenue rather than just help companies through cost-cutting and greater efficiency. Despite heightened regulatory scrutiny, Google had been pursuing its largest acquisition ever, a roughly $23 billion buyout of cybersecurity firm Wiz. But Wiz told employees on Monday it was walking away from the deal and would instead pursue going public. Google also held talks to acquire customer relationship management firm HubSpot before walking away from it earlier this month. The deal would have turned Alphabet into a rival of Salesforce, Oracle and others in that market. Google said on Monday it is planning to keep third-party cookies in its Chrome browser backtracking function after years of pledging to phase out the tiny packets of code used to track internet searches. It marked a major reversal after advertisers expressed concerns that the loss of cookies would limit their ability to collect and parse information for personalizing ads, making them dependent on Google's user databases. Sales for the Mountain View, Calif. company's so-called "other bets," including experimental projects and its self-driving car unit Waymo, rose 28% to $365 million. Porat said the company is planning a multi-year $5 billion investment in Waymo, as rival Cruise slowly maps a course back to US roads after a highly publicized accident in October.

Google parent Alphabet beats Q2 revenue, profit estimates on strong ads, cloud - ET Telecom

Alphabet beat second-quarter revenue and profit estimates on Tuesday, driven by a rise in digital advertising sales and healthy demand for its cloud computing services, but flagged that capital expenses would remain high for the year. Alphabet's results underscore robust demand for digital ads, driven by events like the Paris Olympics and elections in several countries including the U.S., while a recovery in enterprise spending is boosting its software business. Strong adoption of generative artificial intelligence technology drove its cloud business. Advertising sales, Alphabet's chief revenue source, rose 11% to $64.6 billion. The company sells ads in its search product using customer data to better target them. Net income in the quarter ended June 30 rose 28.6% to $23.6 billion, besting the average estimate of $22.9 billion. Investor reaction was mixed, with the shares initially rising about 2% before dipping by a similar percentage. They had gained more than 30% this year, outperforming a 20% rise in tech-heavy Nasdaq Composite Index. "This was another stellar quarter from Google with beats across the board," said Ido Caspi a research analyst with Global X, citing ad sales and artificial intelligence offerings as drivers. Total revenue grew 14% to $84.74 billion, compared with analysts' consensus estimate of $84.19 billion according to LSEG data. Ad sales in its YouTube division rose 13% to $8.67 billion. Revenue from cloud computing services, a widely watched barometer for the health of enterprise technology spending, rose 28.8% to $10.35 billion. Analysts had expected $10.16 billion. Alphabet reported capital expenditures of $13 billion in the June quarter. Ruth Porat, in her last conference call as Alphabet's chief financial officer, told investors that quarterly capital expenditures for the rest of 2024 would be at or above $12 billion. In the January-March period, the company's capital expenditure had jumped 91% to $12 billion, spooking investors. Like its competitors, Alphabet is racing to roll out AI offerings as investors continue to pour billions into the technology. But its AI searches have produced a series of embarrassing results , such as the widely ridiculed suggestion to put glue on pizza to better hold cheese. Google pulled back on the technology in May to work out kinks. The technology will be rolled out to more countries, Alphabet CEO Sundar Pichai told investors on a call on Tuesday. "You'll see us expand the use cases around it." Pichai, without providing a timeline, said AI products could soon drive revenue rather than just help companies through cost-cutting and greater efficiency. Despite heightened regulatory scrutiny, Google had been pursuing its largest acquisition ever, a roughly $23 billion buyout of cybersecurity firm Wiz. But Wiz told employees on Monday it was walking away from the deal and would instead pursue going public. Google also held talks to acquire customer relationship management firm HubSpot before walking away from it earlier this month. The deal would have turned Alphabet into a rival of Salesforce, Oracle and others in that market. Google said on Monday it is planning to keep third-party cookies in its Chrome browser backtracking function after years of pledging to phase out the tiny packets of code used to track internet searches. It marked a major reversal after advertisers expressed concerns that the loss of cookies would limit their ability to collect and parse information for personalizing ads, making them dependent on Google's user databases. Sales for the Mountain View, California company's so-called "other bets," including experimental projects and its self-driving car unit Waymo, rose 28% to $365 million. Porat said the company is planning a multi-year $5 billion investment in Waymo, as rival Cruise slowly maps a course back to U.S. roads after a highly publicized accident in October.

Alphabet set to report Q2 earnings results after the bell

Alphabet CEO Sundar Pichai speaks at the Asia-Pacific Economic Cooperation CEO Summit in San Francisco on Nov. 16, 2023. Google parent company Alphabet is set to report its second-quarter earnings Tuesday after the market closes. Here's what analysts are expecting: Wall Street is also watching several other numbers in the report: Analysts will be watching to see if Alphabet, which has outperformed other internet and software megacaps through the year, can keep posting steady growth amid tougher comparisons from the year prior. They expect modest growth in key areas such as cloud and overall revenue, after a quarter of leadership moves, AI announcements and market expansions. During the quarter, Alphabet saw a number of expansion updates, including for its self-driving car unit Waymo, which opened its service to all San Francisco users. The move was Waymo's second citywide rollout, following its 2020 debut in the Phoenix metropolitan area. In May, Alphabet held its annual developer conference, where it announced a slew of new AI products including a new large language model called Gemini 1.5 Flash, which can quickly summarize conversations, caption images and videos and extract data from large documents and tables. The company also launched AI Overview, which CEO Sundar Pichai called the biggest change in search in 25 years, to a limited audience, allowing users to see a summary of answers to queries at the very top of Google search. However, the quarter also brought criticism for some of those new products. Though Google had been working on AI Overview for more than a year, users quickly noticed that queries were returning nonsensical or inaccurate answers, and they had no way to opt out. Widely circulated results included the false statement that Barack Obama was America's first Muslim president, a suggestion for users to try putting glue in pizza and a recommendation to try eating at least one rock per day. Though Google announced several fixes to remedy AI Overview issues, it came as the latest of several AI product launch mishaps by the search giant, which for some have called into question whether the company can safely rollout AI products at the speed of competition. It also remains unclear just how much revenue growth these new products will generate from users and advertisers alike -- a key discussion topic expected on Alphabet's earnings conference call. Google's search head Liz Reid told employees at a recent all-hands meeting that the company "won't always find everything" when it comes to AI mistakes, CNBC found. Reid urged employees to continue pushing AI products, suggesting they can fix mistakes as users and employees find them. Alphabet also announced a new CFO, Anat Ashkenazi, who came from Eli Lily, the world's most valuable drugmaker. Ashkenazi begins her tenure on July 31, replacing Ruth Porat, who has taken on a new role as Alphabet president and chief investment officer. During the quarter, Alphabet continued its period of belt-tightening as the quarter brought more cuts, including laying off more than 100 people from several teams in Google's cloud unit, one of its fastest-growing businesses. The company also laid off at least 200 employees from its "Core" engineering teams moving some roles to India and Mexico, CNBC found. As belt-tightening and budget reallocations continued through the quarter, company leadership faced employee complaints about "a significant decline in morale," citing lack of trust, tighter deadlines with fewer resources and diminished opportunities for internal advancement, CNBC found. The complaints have come at a time in which the company is trying to maintain a positive perception as a top employer to work for, while it pursues top tech talent during a competitive AI boom. Alphabet also faces questions about a potential new deal, which would reportedly be its largest-ever acquisition. Google is in advanced talks to acquire cybersecurity firm Wiz for $23 billion, according to a person familiar with the matter who told CNBC the deal is expected to close "soon." The acquisition would help bolster Google's cloud unit revenue and comes shortly after the company reportedly ended talks to potentially acquire marketing software firm HubSpot.

Alphabet reports earnings after the market close. Here's how analysts see it playing out

Alphabet is set to report second-quarter earnings after the market closes Tuesday, one of the first of the " Magnificent Seven " to post its results this earnings season. For the period ended June 30, analysts polled by LSEG are expecting the Google and YouTube parent to post earnings of $1.84 per share on revenue of about $84.2 billion. That's a 28% increase in earnings per share and a 13% increase in revenue compared to the same period a year ago. Alphabet topped Wall Street expectations when it reported first quarter results in April, earning $1.89 per share on revenue of $80.54 billion. Several analysts expect Alphabet to top expectations this quarter too, with many reiterating buy ratings and raising their price targets on the stock ahead of Tuesday's report. "We expect in-line or even slightly better Q2 results," wrote Baird analyst Colin Sebastian, who has an overweight rating on the world's dominant internet search engine company. "Specifically, our search and YouTube checks were generally positive, we expect stable Cloud growth and positive mgmt. commentary on GenAI usage and progress with Gemini. Search competition remains a key area of long-term investor focus." For Google search revenue, Wolfe Research estimates growth of 12.6% compared to the prior-year period. On the whole, the firm expects a beat on both top and bottom lines "largely in line" with expectations. Wolfe has an outperform rating on Alphabet and a share price target of $240, implying more than 32% upside from Monday's close. Analyst Shweta Khajuria cited the company's scale, artificial intelligence investments, category leadership position and product catalysts as drivers. Deutsche Bank, Bank of America and TD Cowen all increased their price targets on the stock heading into earnings. Deutsche analyst Benjamin Black cited broader digital advertising strength and generative AI enhancements as reasons to expect second-quarter growth for Alphabet's search and YouTube businesses. The investment bank cited a robust advertising market, AI-driven tailwinds and indications of management's growing cost discipline as reasons to remain bullish on Alphabet, increasing its price target by $5 to $195 while reiterating a buy rating. Bank of America analyst Justin Post is focusing on growing AI integrations across Alphabet's ecosystem. A broader rollout of AI overviews will help boost more activity in search, he said. While Post views AI use as posing a long-term competitive risk, an increase in revenue from AI-driven monetization improvements will be a key takeaway for the second-quarter print. Bank of America recent repeated a buy rating on the stock while increasing its price target by $6 to $206, or about 13% higher than Monday's close. For TD Cowen, anticipated robust spending growth for search in the second quarter - pointing to healthy digital ad environment - combined with the firm's view that YouTube is likely still gaining share among younger viewers, prompted a more bullish stance. The bank increased its target to $220, implying more than 21% upside from Monday's close. "Google is the best-positioned mobile advertising company, in our view, due to its leading mobile advertising revenue position, robust capabilities, and traffic advantage relative to its peers," analyst John Blackledge, who has a buy rating on Alphabet, said in a note. "GOOG's advertising offering, combined with its competitive cloud franchise, results in a digital powerhouse and yields a forecast of double-digit annual top-line growth and similar double-digit annual EBITDA growth over time." More negatively, Rosenblatt Securities analyst Barton Crockett estimates that Alphabet's total sales will fall about 1% below Wal Street's consensus, largely stemming from weaker search, YouTube and network ads. Compared to the first quarter results, Rosenblatt sees comps stiffening in the second quarter, with ad trends slowing "in inverse proportion." Rosenblatt has a neutral rating on Alphabet and a price target of $181 - about where the stock closed Monday. GOOGL mountain 2024-07-22 Alphabet, 2-day Bernstein analyst Mark Shmulik also chooses to stay neutral, rating Alphabet market-perform. Though the analyst sees Alphabet's second-quarter earnings setup as "remarkably similar" to the first quarter, the difference now is that the stock has "largely shaken off" the risk of generative AI. Looking ahead, Shmulik anticipates that a "potentially adverse" verdict by the Department of Justice against the company for monopolizing search and search advertising could come out "over the next few weeks." "Margins in the near term should be supported by layoffs earlier in the year, and consolidation efforts," Shmulik wrote. "However, higher GenAI infrastructure and talent cost longer term could weigh on [operating expenses], with regulatory and legal expense likely to continue to tick up with the DOJ Network case set to begin in September."

Alphabet results to set tone for big tech on advertising, cloud: Report

All eyes are on Alphabet Inc.'s earnings report to set the tone for how megacap technology companies fared in the second quarter. Alphabet, which has gained more than 16% since its blowout first-quarter report, needs to show that spending on AI is continuing to drive revenue in its cloud and advertising businesses. The results also come on the heels of a broader tech selloff, with the Nasdaq 100 Index tumbling nearly 6% in just over a week. That, in addition to tough comparisons with last year, has created a cautious backdrop ahead of Tuesday's earnings release.

Google parent Alphabet beats quarterly revenue, profit estimates

Advertising sales, Alphabet's chief revenue source, rose 11% to $64.6 billion. The company sells ads in its search product using customer data to better target them. Alphabet's results underscore robust demand for digital ads, driven by events like the Paris Olympics and elections in several countries including the U.S., while a recovery in enterprise spending is boosting is software business. "This was another stellar quarter from Google with beats across the board," said Ido Caspi a research analyst with Global X, citing ad sales and artificial intelligence offerings as drivers. Revenue grew 14% to $84.74 billion, compared with analysts' consensus estimate of $84.19 billion according to LSEG data. Revenue from cloud computing services, a widely watched barometer for the health of enterprise technology spending, rose 28.8% to $10.35 billion. Analysts had expected $10.16 billion. Despite heightened regulatory scrutiny, Google had been pursuing its largest acquisition ever, a roughly $23 billion buyout of cybersecurity firm Wiz. But Wiz told employees on Monday it was walking away from the deal and would instead pursue going public. Google also held talks to acquire customer relationship management firm HubSpot before walking away from it earlier this month. The deal would have turned Alphabet into a rival of Salesforce, Oracle and others in that market. Google said on Monday it is planning to keep third-party cookies in its Chrome browser backtracking function after years of pledging to phase out the tiny packets of code used to track internet searches. It marked a major reversal after advertisers expressed concerns that the loss of cookies would limit their ability to collect and parse information for personalizing ads, making them dependent on Google's user databases. Sales for the Mountain View, California company's so-called "other bets," including experimental projects and its self-driving car unit Waymo, rose 28% to $365 million. (Reporting by Yuvraj Malik in Bengaluru; Editing by Devika Syamnath and Richard Chang)

What's Going On With Alphabet Stock Tuesday? - Alphabet (NASDAQ:GOOG)

Analysts expect the tech giant to report earnings of $1.85 per share and revenue of $84.21 billion. Alphabet Inc GOOG shares are in the spotlight Tuesday ahead of earnings after the bell. Here's what you need to know ahead of the report. What To Know: Alphabet is due to report second-quarter financial results after the market close on Tuesday. Analysts expect the tech giant to report earnings of $1.85 per share and revenue of $84.21 billion, according to Benzinga Pro. Last quarter, the Google parent said revenue jumped 15% year-over-year driven by strong performance from Search, YouTube and Cloud. Alphabet authorized an additional share repurchase program of up to $70 billion and announced its first-ever quarterly dividend. "We are well under way with our Gemini era and there's great momentum across the company. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation," Alphabet CEO Sundar Pichai said at the time. Alphabet has beat analyst estimates on the top and bottom lines in five consecutive quarters heading into Tuesday's print. See Also: How To Earn $500 A Month From Alphabet Stock Ahead Of Q2 Earnings Report Here's a look at all of the analyst changes from the past two weeks leading up to earnings: TD Cowen analyst John Blackledge maintained Alphabet with a Buy and raised the price target from $200 to $220. Wolfe Research analyst Shweta Khajuria initiated coverage on Alphabet with an Outperform rating and announced a price target of $240. Argus Research analyst Joseph Bonner maintained Alphabet with a Buy and raised the price target from $200 to $215. BMO Capital analyst Brian Pitz reiterated Alphabet with an Outperform and raised the price target from $215 to $222. Wedbush analyst Scott Devitt reiterated Alphabet with an Outperform and maintained a price target of $205. GOOG Price Action: Google shares were up 0.53% at $184.33 at the time of publication, according to Benzinga Pro. Photo: Shutterstock. Market News and Data brought to you by Benzinga APIs

All eyes on AI to drive Big Tech earnings

Over the next two weeks, the quarterly results of Big Tech giants will offer a glimpse on the bankability of artificial intelligence and whether the major investments AI requires are sustainable for the long haul. Analysts at Wedbush Securities, one of Wall Street's biggest believers in AI's potential, expect "growth and earnings to accelerate with the AI revolution and the wave of transformation" it is causing. The market generally agrees with this rosy AI narrative. Analysts forecast double-digit growth for heavyweights Microsoft and Google, in contrast to Apple, a latecomer to the AI party, with only three percent growth expected. The iPhone maker, which releases its results on August 1, unveiled its new Apple Intelligence system only last month and plans to roll it out gradually over the next months, and only on the latest models. CFRA analyst Angelo Zino believes that the impact of these new features will not be felt until the iPhone 16 launches in September, the first to feature the new AI powers built-in across all options. But he expects Apple's upcoming earnings to show improvement in China sales, a black spot since last year. "Apple's forecasts for the current quarter will be important" in assessing the company's momentum, said Zino. But "if there's one that we were maybe a little bit more concerned about, versus the others, it would be Meta," he said. He pointed out that Mark Zuckerberg's company raised its investment projections last April as it devoted a few billion dollars more on the chips, servers and data centers needed to develop generative AI. CFRA expects Meta's growth to decelerate through the end of the year. Combined with the expected increase in spending on AI, that should put earnings under pressure. As for the earnings of cloud giants Microsoft (July 30) and Amazon (August 1), "we expect them to continue to report very good results, in line with or better than market expectations," said Zino. - 'Crucial' bet - Microsoft is among the best positioned to monetize generative AI, having moved the fastest to implement it across all its products, and pouring $13 billion into OpenAI, the startup stalwart behind ChatGPT. Winning the big bet on AI is "crucial" for the group, said Jeremy Goldman of Emarketer, "but the market is willing to give them a level of patience." The AI frenzy has helped Microsoft's cloud computing business grow in the double digits, something that analysts said could be hard to sustain. "This type of growth cannot hold forever, but the synergies between cloud and AI make it more likely that Microsoft holds onto reliable cloud growth for some time to come," Goldman said. As for Amazon, "investors will want to see that the reacceleration of growth over the first quarter wasn't a one-off" at AWS, the company's world-leading cloud business, said Matt Britzman of Hargreaves Lansdown. Since AWS leads "in everything data-related, it should be well placed to capture a huge chunk of the demand coming from the AI wave," he added. The picture "might be a little less clear" for Google parent Alphabet, which will be the first to publish results on Tuesday, "because of their search business" online, warned Zino. "Skepticism around AI Overviews," introduced by Google in mid-May, "is certainly justified," said Emarketer analyst Evelyn Mitchell-Wolf. This new feature, which offers a written text at the top of results in a Google search, ahead of the traditional links to sites, got off to a rocky start. Internet users were quick to report strange, or potentially dangerous, answers proposed by the feature that had been touted by Google executives as the future direction of search. According to data from BrightEdge, relayed by Search Engine Land, the number of searches presenting a result generated by AI Overviews has plummeted in recent weeks as Google shies away from the feature. Still, many are concerned about the evolution of advertising across the internet if Google pushes on with the Overviews model, which reduces the necessity of clicking into links. Content creators, primarily the media, fear a collapse in revenues. But for Emarketer's Mitchell-Wolf, "as long as Google maintains its status as the default search engine across most smartphones and major browsers, it will continue to be the top destination for search, and the top destination for search ad spending."