With the end of this year's second quarter, companies are revealing how they fared for the last three months. While some may have experienced a few setbacks, Google's parent company Alphabet is doing quite well despite its slow progress in the AI market.
Alphabet Exceeded Expectations
The parent company has been facing a lot of competition in various aspects. With AI, Microsoft's Bing and ChatGPT have been ahead when it comes to chatbots. Alphabet even has reason to worry about other competitors like Meta and TikTok when it comes to ads.
Despite that, the company still had a successful second quarter, and it's all thanks to its search engine Google and video platform Google. By accelerating the revenue from both, it managed to make up for its shortcomings on Bard, as mentioned in The New York Times.
In its Q2, Alphabet reported $74.6 billion in sales, which is an increase from the previous year by 7%. Alphabet also saw a 15% rose om its profits to $18.4 billion. The numbers exceeded the estimates provided by analysts, which are $72.9 billion for quarterly sales and $17.1 billion for profits.
Seeing as the company is a tech giant, it hardly encountered trouble when it comes to ad revenue. Even though users would prefer ChatGPT or Bing over Google Bard, most still use the original search engine over everything else.
As a result of the successful quarter, the tech company's stocks went up by 6% in after-hours trading this Tuesday. Alphabet CEO Sundar Pichai stated that in their seventh year as an AI-first company, they intuitively know how to incorporate AI into their products.
Pichai added that the advances "provide an opportunity to reimagine" many of their products, which include its most important one which is search. Even without further improvements, the majority is still set on using Google's search engine, which somewhat assuages investor concerns.
The search engine alone makes up $42.6 billion of the total revenue in the second quarter, which has also exceeded the expectation of analysts which is $42.2 billion. Even YouTube saw an increase in ad revenue by 4%, resulting in $7.7 billion in revenue.
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YouTube Was Previously Struggling with Ad Revenue
YouTube's 4% increase in ad sales is certainly good news for the company, especially since it previously went through a continuous decline year over year. In Alphabet's earnings report back in late April 2023, YouTube experienced a 2.6% year-over-year decline.
It only managed to get $6.69 billion in ad revenue for its first fiscal quarter, as mentioned in Tech Crunch. By then, it was the third consecutive quarter that the video platform's ad sales went down, which was causing doubts for both creators and investors.
Although the 4% increase is not a guarantee that YouTube is bouncing back, it's certainly a step in the right direction. Hopefully, it continues to grow as it does to ease growing concerns from content creators who also earn from ad sales through the video platform.
Related: Snap's Quarterly Revenue Sees Increase, But is Still Lower Than Last Year's
