Cloud And Search Lift Google-parent Quarterly Profit

Google-parent Alphabet on Tuesday reported profit and revenue that beat expectations as its cloud and search ads businesses thrived.

The tech giant said its net income for the recently ended quarter was $23.6 billion on revenue that climbed 14 percent to $84.7 billion when compared to the same period a year earlier.

"Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud," Google chief executive Sundar Pichai said in an earnings release.

Alphabet said that its cloud computing unit took in $10.3 billion in revenue compared with $8 billion in the same quarter last year, while search ad revenue climbed to $48.5 billion from $42.6 billion.

Only YouTube's revenues came in slightly below analysts' forecasts, at $8.66 billion.

The ramped up revenue comes as investors worry that investments in artificial intelligence may not be generating significant returns for tech companies.

Since the release of ChatGPT at the end of 2022, companies in the sector have been engaged in a frantic race to deploy these generative AI programs for producing text, images and other content, simply through prompts in everyday language.

"We are innovating at every layer of the AI stack," Pichai said.

"Our longstanding infrastructure leadership and in-house research teams position us well as technology evolves and as we pursue the many opportunities ahead."

The earnings release came the same day as reports said Israel-based cloud security startup Wiz has walked away from a deal to be bought by Google for $23 billion and remain a private company.

Alphabet shares that ended the formal trading day essentially flat rose slightly more than a percent to $185.70 in after-market trades that followed release of the earnings figures.

Investors will also be keen to learn during a call with analysts whether recently added AI-generated query result summaries referred to as "Overviews" cause a drop in online ad revenue at Google.

This new feature offers a written text at the top of results in a Google search, ahead of the traditional links to sites.

Many are concerned about the evolution of advertising across the internet if Google pushes on with the Overviews model, which reduces the necessity of clicking into links.

The results came just days after Google said it was ditching its long mooted plan to block tracking "cookies" on its Chrome browser after years of resistance from online publishers and questions from regulators.

They have been long decried by campaigners as an invasion of privacy and are tightly regulated in the EU and elsewhere, with users asked by websites to give permission to have them deployed.

Amazon -- through its Amazon Web Services arm -- Microsoft and Google are the world's biggest providers of cloud-based data centers, which store and process data on a vast scale, in addition to being some of the world's richest companies.

The cloud giants and other rivals competing in the hot field of AI face scrutiny from regulators in the US and Europe.

The US Federal Trade Commission early this year launched a study of AI investments and alliances as part of an effort to make sure regulatory oversight can keep up with developments in artificial intelligence, and stop major players shutting out competitors in a field promising upheaval in multiple sectors.

One major concern is that generative AI requires a massive amount of computing power, something that big tech companies are almost uniquely capable of delivering.