Google’s parent company Alphabet saw significant profit growth notwithstanding the tremendous AI-related spending.
Alphabet reported a 28.6% year-on-year profit surge in the second quarter of 2024, with a net income of $23.6 billion and $84.7 billion in revenue.
Sundar Pichai, Alphabet CEO, noted: “Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud. 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.”
Remarkably, financial growth which exceeded expert expectations took place amid the accelerating AI splurge. Namely, the tech giant reported a $2.3 billion loss from its AI research division under the section officially called “Alphabet-level activities”. The spending on activities, which predominantly include AI-focused shared research and development activities and development costs of AI models, among other corporate costs, nearly doubled from $1.2 billion in Q2, 2023.
There is also notable growth in Google cloud services. According to Ruth Porat, Alphabet President and Chief Investment Officer, CFO, the firm’s Cloud division for the first time exceeded $10 billion in quarterly revenues and $1 billion in operating profit.
Alphabet’s AI-related spending includes Google’s DeepMind subsidiary focusing on artificial intelligence, machine learning, and neuroscience research and Google Research, experimenting with implementing AI into its advertisement and cloud businesses. For instance, recently, Google DeepMind has unveiled the third major version of its AI model called AlphaFold, designed to help scientists develop medicines and increase the effectiveness of disease control efforts. Google has also earlier added artificial intelligence tools from Meta Platforms and Anthropic to its cloud platform.
To accelerate the company’s AI initiatives, Alphabet consolidated teams that focus on building AI models across Google Research and Google DeepMind. Thus, AI model development teams previously under Google Research in the Google Services segment joined the Google DeepMind subsidiary.
As the tech giant propels its AI investment and research, a group of current and former employees of OpenAI and Google DeepMind voiced their concerns about the potential risks associated with the use and development of artificial intelligence.
Nina Bobro
Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.
