Alphabet Q2 earnings beat revenue estimates as SpaceX stake drives gain
Alphabet reported $112.11 billion in second-quarter profit, helped by a $98 billion investment gain tied mostly to SpaceX.
By Daniel Okafor · Business Editor
2 min read
Alphabet Q2 earnings came in ahead of Wall Street’s revenue expectations, with Google’s parent company reporting a sharp profit increase helped by a $98 billion gain tied mainly to equity investments. Alphabet said the gain was mostly connected to its SpaceX stake after SpaceX went public in June.
The Mountain View, California-based company said Wednesday that it earned $112.11 billion, or $9.11 per share, in the April-June quarter. That compared with profit of $28.2 billion, or $2.31 per share, in the same period a year earlier.
Revenue rose 24% to $119.8 billion from $96.43 billion a year earlier. Analysts surveyed by FactSet had expected revenue of $117.06 billion.
Alphabet did not provide an adjusted earnings figure comparable with analysts’ expectation of $2.88 per share, according to FactSet. The company’s reported profit included the $98 billion net gain, which Alphabet said came mainly from gains on equity investments.
Why did Alphabet report a $98 billion gain?
Alphabet said the net gain was driven chiefly by its equity investments, with SpaceX accounting for most of it. The gain boosted reported profit far above the prior-year quarter and made the company’s bottom line less comparable with ordinary operating results.
Chief Executive Sundar Pichai said in a statement that Alphabet’s AI investments are reshaping what the company can do across its businesses. The results showed strength in the company’s core advertising operation and in cloud services, both areas where Alphabet has been spending heavily on artificial intelligence.
Emarketer analyst Nate Elliott called the quarter “impressive,” pointing in particular to Alphabet’s AI products and cloud business. Elliott said Gemini is close to becoming Google’s third consumer AI product with 1 billion users, alongside AI Overviews and AI Mode.
Elliott also said enterprise demand for AI is helping drive cloud growth. He added that continued expansion in search advertising supports Google’s argument that AI adds to search rather than replacing it.
Google’s advertising business remained the main engine of revenue growth, led by its dominant search engine. Alphabet also cited World Cup advertising as a boost, especially on YouTube.
The company’s cloud business grew strongly as well, helped by Alphabet’s AI offerings across chips, models, data, security and agent platforms. Alphabet has been investing heavily in those areas as it tries to turn AI demand into revenue across consumer and enterprise products.
Alphabet shares rose $2.71 to $344.62 in after-hours trading following the results.
This story draws on original reporting from Fortune.