Alphabet says Google Cloud revenue rose 82% as AI demand grows

In short: Alphabet reported strong second-quarter results, helped by fast growth in Google Cloud as more customers bought AI-related services.

What happened

Alphabet, Google’s parent company, said its revenue rose 24% in the second quarter to $120bn, up from $96.4bn a year earlier. That was higher than analysts expected, according to the report.

The company said Google Cloud, its cloud computing division, grew 82% in the quarter. Cloud computing is when companies rent computing power and storage over the internet instead of running their own servers (like renting a warehouse instead of building one).

Alphabet also reported net income of $112bn, which was far above analysts’ expectations of $35.6bn. The Financial Times said this result was boosted by gains on Alphabet’s investments, including a stake in SpaceX.

Why it matters

These results show how AI demand is feeding into Google’s cloud business. But the report also points to a trade-off. Alphabet is spending heavily on data centers and AI hardware, and free cash flow, which is the cash left after paying the bills, turned negative at minus $5.9bn for the quarter. Alphabet has also taken on tens of billions in debt and moved to raise about $85bn through a share sale, after years of buying back its own stock.

Source: Financial Times