Alphabet Betting On AI

Last quarter, Alphabet (Nasdaq: GOOG) was hit by a $5.1 billion fine by the European Commission. But despite the hit, the company surpassed all market expectations and saw its stock soar to record high levels.

Alphabet’s Financials

Alphabet’s second-quarter revenues grew 26% over the year to $32.66 billion, ahead of the Street’s forecast of $32.17 billion. Adjusted EPS of $11.75 was significantly better than the market’s forecast of $9.59 for the quarter. The improvement in earnings was attributed to Google’s efforts at reining in costs.

By segment, revenues from the Google segment grew 25% to $32.5 billion. Traffic acquisition costs grew 26% to $6.42 billion. Revenues from Other Bets grew 49% to $145 million.

Among operating metrics, aggregate paid clicks grew 58% over the year and 15% sequentially. Aggregate cost per click fell 22% over the year and declined 10% over the quarter. Impressions on Google properties improved 1% over the year but reported a 4% decline over the quarter. Cost per impression on Google Network Members’ properties grew 14% over the year, and 7% over the quarter.

Recently, the European Commission slapped a $5.1 billion fine on Alphabet for forcing handset makers to take its Chrome, Search, and Play Store apps when using its free Android mobile system. Google will appeal the decision.

Alphabet’s AI Focus

Alphabet continues to focus on machine learning and AI. During the quarter, it revamped the Google News app to create reviews. The service leverages machine learning to highlight top stories, organizes it for users, and helps explore topics more deeply from a range of clustered news sources. It is also integrating machine learning into Google Assistant so that it can be available in more than 30 languages and 80 countries. Alphabet has also expanded the number of smart devices that are now compatible with the Google Assistant including doorbells, dryers, refrigerators, and others to more than 5,000 devices in the home.

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Black Widow 6 months ago Member's comment

While I understand that #Google has much going for it, I was a bit shocked that Wall Street completely ignored the $5.1 billion fine it was hit with for unfair practices. While I know Google is appealing, I don't expect them to win - they are guilty. And if they can no longer force phone makers to preinstall their apps, that will hurt them as well.