On July 25, local time, Google's parent company Alphabet released its second-quarter 2023 earnings report.。

Performance data shows that Alphabet's revenue in the second quarter was 746.$04 billion, up 7% year-over-year, more than double the 3% growth rate in the first quarter and exceeding analysts' estimates of 4.4% growth rate。Operating profit was 218.$3.8 billion, up 12.3%, a year-over-year increase of 2.6%, down 13% year-on-year in the first quarter of this year..3%。Net profit was 183.$6.8 billion, up about 14.8%, diluted EPS 1.44, higher than expected 1.32 美元。

Google's shares rose more than 7% in after-hours trading as revenue and profit both beat expectations。Since the beginning of the year, the stock has risen nearly 50%。

      

Advertising and cloud revenue growth

     

Specific to each business unit to see the Alphabet's second quarter earnings:

● Google Services: This segment includes products and services such as advertising, Android, Chrome, hardware, Google Maps, Google Pay, search, and YouTube。Revenue from Google services comes primarily from sales of ads, apps and in-app purchases, as well as fees for hardware and subscription-based products such as YouTube Premium and YouTube TV.。

Revenue from this business in the second quarter was 662.$8.5 billion, up 5.5%。Among them, advertising revenue totaled 581.400 million US dollars, achieving a year-on-year growth of 3%。This figure is better than the expected $57.5 billion and the $56.3 billion reported in the same period last year.。YouTube's ad revenue also beat expectations, reaching 76.$600 million, compared to 73.$400 million。Previously, YouTube's advertising revenue fell for three consecutive quarters due to the increase in Tik Tok audience.。

● Google Cloud: This segment includes infrastructure and platform services, collaboration tools, and other services for enterprise customers。Revenue from Google Cloud comes from fees charged for Google Cloud Platform services, Google Workspace and collaboration tools, and other enterprise services。The second quarter revenue of this part of the business was 80..$3.1 billion, up 2.8%。The business made its first profit in the first quarter of this year and continued its earnings trend in the second quarter, reaching 3.$9.5 billion, compared with a loss of 5.900 million dollars。

Other Bets: This revenue comes mainly from sales of health technology and Internet services.。The division's second quarter operating loss 8..$1.3 billion, up from $1.3 billion in the same period last year..$400 million loss narrows。

Sundar Pichai, CEO of Alphabet and Google, said: "Our products and company showed exciting momentum, driving strong results in the quarter.。Our continued leadership in artificial intelligence, along with engineering and innovation excellence, is driving the next evolution of search and improving all of our services.。We have 15 products, each serving 500 million people, and 6 products, each serving more than 2 billion people, so we have many opportunities to achieve our mission。"

Google's overall growth in advertising and cloud revenue is related to its cost-cutting measures.。Alphabet announced 12,000 job cuts in January and reported that it recorded up to $2 billion in employee severance payments and related expenses for the six months ended June 30.。In addition, the company is taking action to optimize its global office space, recording a total cost of 6 for the six months ended June 30..$3.3 billion。

Ruth Porat, Chief Financial Officer of Alphabet and Google, said: "Our financial results reflect the continued resilience of the search business, accelerated revenue growth in the search business and YouTube, and momentum in the cloud business.。We continue to invest in growth while prioritizing a lasting company-wide redesign of our cost base and creating the ability to deliver sustainable value over the long term.。"

Ruth became CFO in May 2015 and is the company's longest-serving CFO.。She will begin her new role as chief investment officer and president on September 1, overseeing Alphabet's investments in its portfolio and helping the company manage investments in countries and communities around the world.。At the same time, she will retain the position of Chief Financial Officer, leading the company's 2024 and long-term capital planning processes until a successor is found.。

Sundar said: "Ruth will be committed to driving financial discipline and shareholder returns while spearheading investments to create sustainable long-term value.。"

Ruth's promotion is seen as a sign that Alphabet is looking to cut losses at its long-losing OtherBets division, which includes the self-driving car Waymo and other extensive projects dedicated to technology, most of which are expected to take years to generate returns.。

   

Unavoidable Topic - AI

  

In recent years, as an old "player" of artificial intelligence, Alphabet and Microsoft have both fallen into silence. It was not until the emergence of ChatGPT that the heat in the field of AI was reignited.。Microsoft not only doubled its investment in OpenAI, the company behind ChatGPT, but also re-upgraded its Bing search engine.。Although Google still has many more users than Bing, Microsoft is "preemptive" with ChatGPT, and Microsoft is integrating ChatGPT with its business。

To demonstrate its strength, Alphabet announced the latest big model PaLM2 at its annual Google I / O developer conference in May and introduced more than 25 PaLM2-based products and features.。Its artificial intelligence robot Bard has also completed an "upgrade," not only adding more functions, but also fully running on top of PaLM2。The end of this developer conference has greatly eased concerns that Google will be overtaken by Microsoft in the AI space and driven the company's stock price up。

"When investors questioned Google's ability to keep up with other tech giants in the AI boom, Google not only achieved excellent earnings per share, exceeding expectations, but also turned a profit by a considerable margin.。"Investing.Comm senior analyst Thomas Monteiro said: "This is a strong indication that the giant may be entering a new phase of growth.。"

He added: "Google has finally consolidated its dominance in the controversial cloud space, and now there is room to expand its focus into artificial intelligence.。"

However, AI technology has a "cost," with Alphabet's second-quarter capital expenditure 68.900 million dollars。That's up from $6.3 billion in the first quarter, but below market expectations of 80 percent..100 million dollars。Ruth said on a conference call that the bulk of Alphabet's second-quarter capital expenditures were "meaningful investments" in servers and AI computing.。

In addition, the company plans to integrate generative AI into other products such as Gmail, Google Photos and its Android mobile operating system.。

Sundar told analysts on a conference call that advertising was entering the company's improved search engine.。Alphabet is testing which formats work and where to place ads in its AI search。According to Philipp Schindler, the company's chief commercial officer, 80 percent of advertisers now use at least one AI-powered search product.。

   

Founder "out of the mountain"

  

According to media reports, as Alphabet seeks to strengthen its artificial intelligence field, Google co-founder Sergey Brin began to reappear in the company.。

Sergey and another founder, Larry Page, both stepped down as executives at Alphabet in December 2019 and handed over control of the company to current CEO Sundar.。However, Sergei and Larry remain on the company's board of directors.。Since leaving, they have largely taken a non-intrusive approach to the company.。

However, this year's "wave" of artificial intelligence has allowed the retired founders to start "out of the mountain."。

People familiar with the matter said Sergei would show up at Google's offices about three to four days a week.。He now meets regularly with employees involved in AI research within Google to discuss new developments.。He also helped build Gemini, Google's next-generation artificial intelligence model, which is expected to outperform other models such as ChatGPT currently on the market.。Sergei was also reportedly involved in internal personnel decisions, including hiring popular researchers in related fields.。

Sergey's return to Google reflects Google's high emphasis on AI at this stage。

After the emergence of ChatGPT, there were reports that Google planned to launch more than 20 new products in 2023, demonstrating the chatbot function of its search engine to compete with OpenAI's products.。

As more and more large enterprises enter the AI track, Google now has to worry not only about ChatGPT, but also about several other AI products recently launched, including Llama2, which Meta developed in cooperation with Microsoft.。

Earlier, when Google was laying off employees, Sundar said in an email to employees that the purpose of the layoffs was to refocus the company on artificial intelligence, writing in the email: "There is a huge opportunity for artificial intelligence in our products, and we are ready to treat it boldly and responsibly.。"