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id="primary" class="content-area"> <main id="main" class="site-main" role="main"> <div class="article-wrap"> <article id="post-1438141" class="post-1438141 post type-post status-publish format-standard has-post-thumbnail tag-earnings observer_company-alphabet observer_company-goldman-sachs observer_company-google observer_company-uber observer_company-walmart observer_company-waymo channel-business channel-artificial-intelligence channel-technology channel-big-tech nyo_person-sundar-pichai nyo_person-ruth-porat nyo_person-philipp-schindler" data-post="" data-title="Google’s Bet on A.I. Search and Cloud Is Paying Off" data-url="" data-page-url="/2024/07/alphabet-google-q2-earnings/" data-date="2024-07-24 07:00:56" data-date-iso="2024-07-24T07:00:56-04:00" data-author="Aaron Mok" data-coauthors="Aaron Mok" data-channels="Business, Artificial Intelligence, Technology, Big Tech" data-piped-channels="Business|Artificial Intelligence|Technology|Big Tech" > <header class="entry-header"> <div class="entry-teaser"> <a href="https://observer.com/business/" aria-label="Read more articles on Business">Business</a><span>  •  </span><a href="https://observer.com/technology/" aria-label="Read more articles on Technology">Technology</a> </div> <h1 class="entry-title" itemprop="headline">Google’s Bet on A.I. Search and Cloud Is Paying Off</h1> <h2 class="dek">Google Cloud revenue jumped 29 percent year-over-year as demand for A.I. infrastructure continues to grow.</h2> <div class="entry-meta nyo-social-comments nyo-social-comments-above"> By <span class="author" itemprop="author"><a rel="author" class="url fn n" href="https://observer.com/author/aaron-mok/" title="View All Posts by Aaron Mok">Aaron Mok</a></span> • <span class="entry-date"><time itemprop="datePublished" datetime="2024-07-24">07/24/24 7:00am</time></span> <svg aria-hidden="true" style="position: absolute; width: 0; height: 0; overflow: hidden;" version="1.1" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"> <defs> <symbol id="icon-envelope" viewBox="0 0 28 28"> <path d="M26 23.5v-12c-0.328 0.375-0.688 0.719-1.078 1.031-2.234 1.719-4.484 3.469-6.656 5.281-1.172 0.984-2.625 2.188-4.25 2.188h-0.031c-1.625 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The tech giant generated $84.74 billion in total revenue in the April-June quarter—up 14 percent year-over-year—which blew past Wall Street’s estimates. Net income rose to $23.62 billion from $18.37 billion last year—driven by strong growth in Google’s search and cloud businesses. </span></p> <section class="wp-block-observer-newsletters observer-newsletters--in-content"> <form class="newsletters-block__container" method="post" action="#" id="newsletter-6747b0a1abd477.13129895" data-form="subscribe-newsletter" data-recaptcha-key="6LexvRggAAAAAF1HvCWrHtG4UAa7m0WIdyIgstAo" data-form-action="https://observer.com/newsletter-subscribe.json"> <div class="observer-newsletters__in-content-icon"> <svg fill="none" xmlns="http://www.w3.org/2000/svg" viewBox="0 0 51 51" width="50" height="50"><path d="M18.124 15.961C23.25 8.783 30.096 4.967 33.682 7.305a4.04 4.04 0 0 1 1.013.97c0 .028 8.3 16.017 8.3 16.017l4.634 2.989a6.39 6.39 0 0 1 1.793 1.732c.472.684.798 1.45.96 2.253.161.804.154 1.63-.02 2.432a6.075 6.075 0 0 1-.995 2.24l-.209.291c-.977 1.355-2.475 2.288-4.17 2.598a6.827 6.827 0 0 1-4.883-.943L32.662 48.32c-1.095 1.285-3.197 2.564-5.792 1.059a3.834 3.834 0 0 1-1.15-1.093 3.63 3.63 0 0 1-.587-1.444 3.763 3.763 0 0 1 .008-1.55 3.85 3.85 0 0 1 .635-1.427l6.556-9.208s-15.5-1.174-15.557-1.196a3.812 3.812 0 0 1-1.35-.552c-1.842-1.19-2.502-3.688-1.865-7.035.573-3.082 2.2-6.572 4.564-9.914Zm29.349 19.182.208-.292c.334-.467.567-.992.687-1.545a4.09 4.09 0 0 0 .012-1.678 4.18 4.18 0 0 0-.665-1.555 4.407 4.407 0 0 0-1.239-1.193l-4.002-2.592-5.282 7.405 4.002 2.592a4.64 4.64 0 0 0 1.624.655c.581.114 1.18.119 1.764.013a4.65 4.65 0 0 0 1.634-.631 4.42 4.42 0 0 0 1.257-1.179Zm-20.03 9.809a1.96 1.96 0 0 0-.324 1.528c.108.53.433.998.904 1.3.472.302 1.05.413 1.608.31A2.158 2.158 0 0 0 31 47.23l7.42-10.405-2.983-1.93-.788-.06-7.205 10.117Zm7.832-12.009 5.757-8.072-5.491-10.657c-.533 2.993-2.091 6.55-4.582 10.04-2.49 3.49-5.386 6.18-8.108 7.758l12.424.931ZM18.188 31.66c2.768-.171 7.275-3.143 11.092-8.497s5.056-10.42 4.205-12.94a2.354 2.354 0 0 0-.877-1.185 2.55 2.55 0 0 0-1.44-.47c-2.746 0-7.42 2.989-11.347 8.497-2.212 3.099-3.823 6.34-4.263 9.175-.863 5.42 2.63 5.42 2.63 5.42Z" fill="#000"/><path d="M25.364 16.165a5.726 5.726 0 0 1 2.148.01c.708.14 1.38.412 1.976.8.11.073.204.166.276.272a.941.941 0 0 1 .14.73.947.947 0 0 1-.158.347.998.998 0 0 1-.285.263 1.047 1.047 0 0 1-.767.133 1.046 1.046 0 0 1-.364-.15 3.572 3.572 0 0 0-1.25-.503 3.648 3.648 0 0 0-1.355-.01 3.574 3.574 0 0 0-1.257.486c-.381.238-.71.546-.966.906s-.436.763-.528 1.189a3.152 3.152 0 0 0-.01 1.29c.086.427.26.834.51 1.197.25.363.574.675.952.92a.972.972 0 0 1 .382.48c.07.194.074.405.01.602a.969.969 0 0 1-.37.49 1.048 1.048 0 0 1-.601.186 1.026 1.026 0 0 1-.58-.165 5.305 5.305 0 0 1-2.01-2.363 4.999 4.999 0 0 1-.29-3.028 5.165 5.165 0 0 1 1.527-2.67 5.592 5.592 0 0 1 2.83-1.412h.04Zm-8.491-6.914h-.098c-.25 0-.493-.088-.679-.248a.95.95 0 0 1-.329-.617l-.782-7.234a.919.919 0 0 1 .21-.725c.083-.1.188-.185.306-.247a1.05 1.05 0 0 1 1.14.105.974.974 0 0 1 .36.668l.776 7.24a.933.933 0 0 1-.222.707c-.17.199-.414.325-.682.351ZM3.771 7.763c.149-.214.38-.363.644-.414.264-.052.538-.002.764.138l7.06 4.41a.974.974 0 0 1 .396.482.922.922 0 0 1 .014.611.969.969 0 0 1-.376.496 1.05 1.05 0 0 1-.613.182 1.07 1.07 0 0 1-.58-.155l-7.06-4.41a.961.961 0 0 1-.415-.622.928.928 0 0 1 .166-.718ZM1.61 19.54l8.214-1.406c.265-.045.538.011.759.158.221.146.372.37.42.622a.93.93 0 0 1-.166.723c-.154.21-.389.354-.654.4l-8.207 1.405h-.18c-.258.007-.51-.08-.703-.243A.933.933 0 0 1 .97 19.88a1.03 1.03 0 0 1 .646-.358l-.005.017Z" fill="#000"/></svg> </div> <div class="observer-newsletters__in-content-inner"> <header class="newsletters-block__header"> <h2 class="newsletters-block__title"> Sign Up For Our Daily Newsletter </h2> </header> <div class="newsletters-block__form"> <input type="hidden" name="action" value="subscribe_newsletter"> <input type="hidden" name="newsletters[]" value="newsletter-daily" id="newsletter-daily"> <div class="newsletters-block__fields wp-block-button"> <input class="newsletters-block__input" aria-label="Email Address" placeholder="Email Address" type="email" name="email" required=""> <button class="wp-block-button__link in_article_single_newsletter_button" type="submit"> Sign Up </button> </div> <p class="newsletter-block__success"> Thank you for signing up! </p> <p class="newsletter-block__error"></p> <p class="newsletters-block__disclaimer"> By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. </p> </div> <a href="https://observer.com/subscribe/" class="newsletters-block__see-all in_article_single_newsletter_see_all_link"> See all of our newsletters </a> </div> </form> </section> <p><span style="font-weight: 400">“Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud,” Alphabet and Google CEO <a href="https://observer.com/person/sundar-pichai/" title="Sundar Pichai" class="company-link">Sundar Pichai</a> said in a </span><a target="_blank" target="_blank" rel="noopener" href="https://abc.xyz/assets/19/e4/3dc1d4d6439c81206370167db1bd/2024q2-alphabet-earnings-release.pdf" data-lasso-id="2565634"><span style="font-weight: 400">press release</span></a><span style="font-weight: 400">. “We are innovating at every layer of the A.I. stack. Our longstanding infrastructure leadership and in-house research teams position us well as technology evolves and we pursue the many opportunities ahead.”</span></p><div data-ad="1" class="ad-wrapper ad-top-margin ad-has-disclaimer ad-incontent ad-mobile htlad-observer_article_instream_mobile_1" id="observer_article_instream_mobile_1"></div><div class="ad-wrapper ad-top-margin ad-desktop ad-has-disclaimer ad-incontent htlad-observer_article_instream_dsk_1" id="observer_article_instream_dsk_1"></div> <p><span style="font-weight: 400">Google Search—the bulk of Alphabet’s quarterly</span> <span style="font-weight: 400">revenue – saw its revenue climb to $48.51 billion in the past quarter from $42.63 billion the year prior. That growth comes, in part, from the integration of Google’s large language model, Gemini, into its search engine. In May, Google launched <a href="https://observer.com/2024/06/google-ai-overview-accuracy-digital-publisher/" data-lasso-id="2565635">AI Overviews,</a> a feature that answers user queries with</span><span style="font-weight: 400"> A.I.-generated answers. The feature was initially mired with controversy after some users caught it spewing questionable, inaccurate information. In one instance, it suggested a</span><a target="_blank" target="_blank" rel="noopener" href="https://www.nytimes.com/2024/05/24/technology/google-ai-overview-search.html" data-lasso-id="2565636"><span style="font-weight: 400"> pizza recipe made with glue </span></a><span style="font-weight: 400">and claimed that dogs have played in the NBA.</span></p> <p><span style="font-weight: 400">“With A.I., we are delivering better responses on more types of search queries and introducing new ways to search,” Pichai said on</span> <span style="font-weight: 400">yesterday’s earnings call. “We are pleased to see the positive trends from our testing continue as we roll out AI Overviews, including increases in search usage and increased user satisfaction with the results.” </span></p> <p><span style="font-weight: 400">Google Cloud generated $10.3 billion in revenue, up 29 percent from the same quarter last year, as the demand for A.I. infrastructure and generative A.I. tools like Google Workspace, Vertex AI and AI Studio hosted on its servers continues to grow. </span><a target="_blank" target="_blank" rel="noopener" href="https://cloud.google.com/customers?sr=IksIAxI1EhdBSSBhbmQgTWFjaGluZSBMZWFybmluZxoaUFJPRFVDVF9DQVRFR09SWV9BSV9BTkRfTUwaEFByb2R1Y3QgQ2F0ZWdvcnkiNwgEEisSDVUuUy4gJiBDYW5hZGEaGlJFR0lPTl9HUk9VUF9VU19BTkRfQ0FOQURBGgZSZWdpb24iJQgBEiEaH0NPUlBVU19UWVBFX0NVU1RPTUVSX0NBU0VfU1RVRFkoDDoIGgQKAmVuKAE" data-lasso-id="2565637"><span style="font-weight: 400">Google Cloud customers</span></a><span style="font-weight: 400"> include <a href="https://observer.com/company/uber/" title="Uber" class="company-link">Uber (UBER)</a>, <a href="https://observer.com/company/walmart/" title="Walmart" class="company-link">Walmart (WMT)</a>, and <a href="https://observer.com/company/goldman-sachs/" title="Goldman Sachs" class="company-link">Goldman Sachs (GS)</a>. </span></p> <p><span style="font-weight: 400">“Our A.I. infrastructure and generative A.I. solutions for Cloud customers have already generated billions in revenues and are being used by more than 2 million developers,” Google’s CFO <a href="https://observer.com/person/ruth-porat/" title="Ruth Porat" class="company-link">Ruth Porat</a> said on the earnings call. The “majority of our top 100 customers,” she noted, are “already using our generative A.I. solutions,” adding that Alphabet continues to “invest aggressively in the business.” </span></p><div data-ad="1" class="ad-wrapper ad-top-margin ad-has-disclaimer ad-incontent ad-mobile htlad-observer_article_instream_mobile_2" id="observer_article_instream_mobile_2"></div><div class="ad-wrapper ad-top-margin ad-desktop ad-has-disclaimer ad-incontent htlad-observer_article_instream_dsk_2" id="observer_article_instream_dsk_2"></div> <p><span style="font-weight: 400">On top of that, YouTube ad revenue was up 13 percent year-over-year. Brand advertising on YouTube continued to see strong momentum, with large advertisers across verticals like retail, entertainment, telecommunications and home and personal care partnering with creators, Google’s chief business officer, <a href="https://observer.com/person/philipp-schindler/" title="Philipp Schindler" class="company-link">Philipp Schindler</a>, said on the call. Direct response marketing on YouTube also grew, as Google continues to make it easier for brands to display ads on content like YouTube Shorts which the company said is seeing increased viewer engagement.</span></p> <h3>Google saw Network revenue and headcount decline</h3> <p><span style="font-weight: 400">Despite growth in key areas, Alphabet saw a drop in revenue in Google Network, a group of websites where Google Ads can appear, and the company’s overall number of employees in the wake of a series of layoffs last quarter. The attempt to acquire Wiz, a cybersecurity company that would’ve been Google’s largest acquisition to date, wasn’t mentioned on the call. </span></p> <p><span style="font-weight: 400">Looking ahead, CEO Pichai said the AI Overviews will expand into more countries, respond to more queries, and include shopping ads. Alphabet also said it will invest $5 billion into the self-driving car company <a href="https://observer.com/company/waymo/" title="Waymo" class="company-link">Waymo</a>. </span><span style="font-weight: 400">More updates to the Android and Pixel smartphones, which will include Gemini, will be announced at an upcoming event in August. </span><span style="font-weight: 400">“As I spoke about last quarter, we are uniquely well positioned for the A.I. opportunity ahead,” Pichai said.</span></p> </p><div data-ad="1" class="ad-wrapper ad-top-margin ad-has-disclaimer ad-incontent ad-mobile htlad-observer_article_instream_mobile_3" id="observer_article_instream_mobile_3"></div><div class="ad-wrapper ad-top-margin ad-desktop ad-has-disclaimer ad-incontent htlad-observer_article_instream_dsk_3" id="observer_article_instream_dsk_3"></div> <img itemprop="image" src="https://observer.com/wp-content/uploads/sites/2/2024/07/GettyImages-2136140844-e1721786553443.jpg?quality=80&w=773" alt="Google’s Bet on A.I. Search and Cloud Is Paying Off" style="display:none;width:0;"> </div> <footer class="entry-meta"> </footer> </article> <div class="breadcrumbs"> <span class="before-text"> Filed Under:</span> <a href="https://observer.com/business/" aria-label="Read articles filed under Business">Business</a>, <a href="https://observer.com/artificial-intelligence/" aria-label="Read articles filed under Artificial Intelligence">Artificial Intelligence</a>, <a href="https://observer.com/technology/" aria-label="Read articles filed under Technology">Technology</a>, <a href="https://observer.com/big-tech/" aria-label="Read articles filed under Big Tech">Big Tech</a>, <a href="https://observer.com/person/philipp-schindler/" aria-label="Read articles filed under Philipp Schindler">Philipp Schindler</a>, <a href="https://observer.com/person/ruth-porat/" aria-label="Read articles filed under Ruth Porat">Ruth Porat</a>, <a href="https://observer.com/person/sundar-pichai/" aria-label="Read articles filed under 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