Alphabet aka Google (GOOG) recently reported it’s second quarter results that continued to outpace all market expectations. After the initial hiccups with generative AI, Google has been focused on releasing much more improved generative AI offerings.

Alphabet’s Financials

Alphabet’s second quarter net revenues grew 9% to $74.6 billion, ahead of the market’s forecast of $72.82 billion. Net income rose 14.8% to $1.44 per share, again surpassing the market’s forecast of $1.34.

Revenue from YouTube advertising was $7.67 billion compared with the market’s estimate of $7.43 billion. Google Cloud revenue was $8.03 billion, ahead of the market’s estimates of $7.87 billion. Traffic acquisition costs were $12.54 billion, ahead of the market’s estimate of $12.37 billion.

By segment, Google’s Search and Other revenues grew from $40.69 billion a year ago to $42.63 billion. Revenue from Other Bets was $285 million, ahead of $193 million a year ago.

Google did not provide an outlook for the current quarter. The market is looking for an EPS of $1.30 on revenues of $68.78 billion for the coming quarter and EPS of $5.08 on revenues of $276.27 billion for the current fiscal year.

Google’s Growth Focus

During the quarter, Google announced the launch of Search Generative Experience (SGE). The service uses generative AI to make Search more natural and intuitive. Generative AI has the ability to connect the dots for users as they explore a subject, helping to weigh factors and preferences prior to making a purchase or booking trips. Search Generative Experience will put AI-generated answers at the top of its search results page and add images to AI powered results. Soon, it will also be adding videos to these results. Google claims that the improved technology has reduced by half the time Google needs to generate AI overviews.

It is not just search that is relying on AI. Google is also looking at upgrading its Assistant with generative AI capabilities. While details of the plan have not been disclosed, recent market reports suggest that Google is looking at reorganizing the Assistant team around its Language Learning Model (LLM) technology.

Google’s stock is trading at $131.53 with a market capitalization of $1.66 trillion. It hit a 52-week high of $134.07 in July and a 52-week low of $83.45 in October last year.

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