Google Cloud surpasses $10B revenue mark for the first time
What's the story
Alphabet, Google's parent company, has reported a robust second-quarter performance for 2024, surpassing revenue and profit estimates. The strong results were primarily driven by a rise in digital advertising sales, and high demand for its cloud computing services. Notably, Google Cloud's quarterly revenue surpassed the $10 billion mark for the first time, while its operating profit jumped to $1.2 billion.
Revenue growth
Advertising sales and net income see significant rise
Alphabet's primary revenue stream, advertising sales, saw an 11% increase to $64.6 billion. The company's net income also experienced a significant rise of 28.6%, reaching $23.6 billion for the quarter ending June 30, surpassing the average estimate of $22.9 billion. Total revenue grew by 14% to $84.74 billion, exceeding analysts' consensus estimate of $84.19 billion according to LSEG data.
Business segments
YouTube and cloud services contribute to Alphabet's growth
Alphabet's YouTube division saw a 13% increase in advertisement sales, reaching $8.67 billion. The company's cloud computing services segment, an important indicator of enterprise technology spending health, experienced a 28.8% revenue increase, totaling $10.35 billion. This surpassed analysts' expectations of $10.16 billion, further contributing to Alphabet's strong second quarter performance in 2024.
Market reaction
Shares fluctuate despite strong Q2 performance
Despite positive financial results, investor reactions to Alphabet's performance were mixed. The firm's shares initially rose by around 2% but later dipped by a similar percentage. However, Alphabet's stocks have seen a significant rise of over 30% this year, outpacing the tech-heavy Nasdaq Composite Index's 20% rise.
Future investments
Alphabet's high capital expenditures expected to continue
Alphabet has hinted that its capital expenditures are expected to remain high for the rest of the year, with expenditures reported at $13 billion for the June quarter. In her final conference call as Alphabet's CFO, Ruth Porat informed investors that capital expenditures for the remaining quarters of 2024, would be at or above $12 billion. This announcement comes amid a strong second quarter performance by the tech giant.