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However, YouTube’s advertising revenue miss is a ‘lagging indicator of social video’s growth’ according to Forrester analyst Nikhil Lai.
Google parent Alphabet narrowly beat analyst expectations in its latest quarterly earnings, with strong performance across its search and cloud products.
In its second quarter earnings results for 2024, Alphabet posted revenue of $84.74bn, which is more than $10bn or 14pc higher than the same period in 2023. Revenue from Google Search and related services was $48.5bn while Cloud revenue stood at $10.34bn.
Ads from YouTube brought in $8.66bn in revenue, which is $1bn higher than last year but below analyst expectations of nearly $9bn, according to StreetAccount. Alphabet beat analyst expectations on most other parameters, but CNBC reports the company’s shares were down 2pc in after-hours trading.
“Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud,” said CEO Sundar Pichai. “We are innovating at every layer of the AI stack. Our longstanding infrastructure leadership and in-house research teams position us well as technology evolves and as we pursue the many opportunities ahead.”
Alphabet reported a very strong previous quarter, as revenue grew by 15pc year-on-year to $80.5bn. The company’s net income surged to nearly $23.7bn, an increase of 57pc.
The latest earnings indicates Google’s advertising business continues to grow after a slowdown in 2022 and 2023 due to inflation and tighter marketing budgets.
“Alphabet’s growing ad revenue is sustained by strong search ad revenue, which continues growing despite advertisers’ uncertainty about how Google will monetise conversational search and measure search without clicks,” said Forrester senior analyst Nikhil Lai.
“YouTube’s miss is a lagging indicator of social video’s growth, particularly TikTok’s which effectively monetises attention and engagement, and of a softer-than-usual TV upfront.”
Meanwhile, the performance shown by Google Cloud shows that the organisation is “standing on its own two feet” within Alphabet, according to Forrester principal analyst Lee Sustar.
“While Google Cloud’s operating profit … is still only a fraction of the revenue of its rivals AWS and Microsoft Azure, Google’s AI offerings have apparently helped it expand its footprint with existing customers and position itself to win new accounts,” Sustar said.
“It’s another indicator of how AI has brought new dynamism in the enterprise public cloud market.”
Alphabet’s results come just days after Israeli-founded cybersecurity start-up Wiz backed out of a deal to be acquired by Google for roughly $23bn.
Google also said this week it will no longer go ahead with its third-party cookie ban that has been four years in the making, instead introducing a new prompt for users to choose how they want to be tracked.
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