In the second quarter, Alphabet increased its revenue by 24%, reaching $119.8 billion. However, due to significant investments in AI infrastructure, the company recorded a negative free cash flow for the first time in its public history, amounting to -$5.9 billion.
Source: Alphabet.Overall, the company spent $45 billion, with 60% allocated to servers and the remaining 40% to data centers.
Alphabet has already raised its annual AI spending forecast to $195-205 billion, up from a previous estimate of $10 billion.
Despite this, the period from April to June marked the twelfth consecutive quarter of double-digit revenue growth for the company. Operating profit rose by 30%, and the margin expanded by two percentage points to 34%.
The company's net income increased to $112.1 billion, with diluted earnings per share reaching $9.11, significantly boosted by unrealized gains on equity securities.
Source: Alphabet.Alphabet and Google CEO Sundar Pichai attributed the results to the integration of AI into the company's key products, particularly highlighting Search, where users are transitioning to a unified search experience based on AI Overviews and AI Mode. He also noted the growing audience for the Gemini chatbot.
The main driver for the quarter remained Google Cloud, with revenue soaring by 82% to $24.8 billion. Alphabet attributed this acceleration to increased demand for Google Cloud Platform in the corporate AI infrastructure segments.
Pichai described the quarter as indicative of the business direction, stating that these figures confirm that AI investments are already translating into commercial demand.
"Based on what we see in advanced technologies, we have a lot of work ahead to bring this to life and provide users with unforgettable experiences. So, this looks like exceptional opportunities with exceptional returns," added the head of Alphabet.
Investors viewed the quarter as strong in terms of revenue and cloud performance but expressed caution regarding the new spending trajectory. Following the report's release on July 22, Alphabet's shares (GOOG) fell by 4.28% in after-hours trading.
Source: Yahoo.Finance.It is worth noting that in June, Alphabet announced plans to raise $80 billion through a stock offering, with the funds earmarked for scaling its AI infrastructure.