Google's parent company Alphabet announcedSecond quarter financial report for fiscal year 2024, with the growth momentum of AI boosting the performance of search and cloud businesses, revenue exceeded US$964 billion, an increase of 14% over the same period of the previous year. This financial report performance not only highlights the solid core business of Alphabet, but also shows that AI technology is fully penetrating its various products and services, bringing substantial benefits to revenue and user experience.
Google search and YouTube ads continue to grow, AI features drive search trends
From the details of the financial report, Alphabet's main revenue source this quarter still comes from Google services, accounting for a total of approximately US$825 billion in revenue, accounting for more than 85% of total revenue. Among them, the search advertising business grew by 13% to US$542 billion, and YouTube advertising revenue also grew by 13% to US$98 billion, showing that the digital advertising market still has significant momentum under the added value of AI.
Although Google's introduction of AI Overviews and AI Mode in search results once caused the market to worry about whether it would squeeze out traditional advertising click-through rates, the actual results show positive effects.
Currently, AI Overviews has been launched in more than 200 countries and regions around the world, supporting 40 languages, and the number of monthly active users has exceeded 20 billion. As for the more advanced AI Mode, it has functions similar to chatbots and can retain context for multiple rounds of interaction. It has been launched in the US and India markets first, and currently has accumulated more than 1 million monthly active users.
Alphabet CEO Sundar Pichai emphasized that AI is positively affecting every department of the company, especially in the application of search services. At the earnings conference, Sundar Pichai pointed out that AI Overviews not only improves the search experience, but also drives the growth of related type queries by more than 10%.
At the same time, Sundar Pichai said that these AI features do not appear every time a search is performed, but are triggered only by specific types of queries, such as questions that require the integration of multiple sources of data, further highlighting that AI does not replace search, but is an auxiliary tool to enhance search quality.
Google Cloud services grew 32% year-over-year, with AI and large enterprise collaborations boosting cloud momentum
In addition to its core search business, Google Cloud's revenue growth was also impressive, reaching $136 billion in the second quarter, a year-over-year increase of 32%. Its operating profit grew significantly by 141% to $28 billion, clearly moving out of its past loss-making phase and becoming an important engine driving Alphabet's overall revenue.
Sundar Pichai specifically mentioned that the number of large contracts worth more than US$2.5 million this quarter doubled compared to the same period last year, and the total number of contracts worth more than US$10 billion signed in the first half of the year was the same as the whole year of 2024, showing that large enterprises have deep confidence and reliance on Google Cloud's cloud AI solutions.
Currently, more than 8.5 companies have imported Google's Gemini large language model, and its usage has increased 35 times year-on-year. In order to accelerate the development of AI applications, Google also launched an open source agent service toolkit called "Agent Development Kit" (ADK) and a cloud deployment platform "Agentspace" this quarter.
ADK provides developers with a basic framework for building AI agent services and supports local development; while Agentspace provides agent management, deployment and collaboration capabilities for Google Cloud Platform (GCP) users. Both are built on the Google Cloud platform, integrating resources such as Gemini models, Vertex AI and Workspace to form a complete AI tool chain ecosystem.
Gemini and AI applications expand, active users exceed 4.5 million
In addition to enterprise applications, Google's consumer-oriented AI ecosystem is also expanding steadily. According to official data, the number of monthly active users of Gemini App has exceeded 4.5 million, and the number of daily usage requests has increased by more than XNUMX% compared with the previous quarter, reflecting the rapid increase in consumer acceptance of AI tools.
But in comparison, competitor OpenAI's ChatGPT is also growing steadily. According to data mentioned by CEO Sam Altman in his previous TED speech, the number of active users of ChatGPT per week is currently close to 8 million. Although both are mainstream applications of generative AI, their positioning is slightly different, but the speed of their development will undoubtedly intensify the competition in the generative AI market.
"Other Bets" continues to invest in the future, but losses widen
As for Alphabet's experimental business unit "Other Bets", such as self-driving car company Waymo and biomedical technology company Verily, its revenue this quarter was US$3.7 million, an annual increase of only 2.2%, while its operating loss widened to US$12.5 billion, which is still on the rise compared to the loss of US$11.3 billion in the same period last year, indicating that non-core businesses are still in the long-term investment stage.
However, Sundar Pichai believes that these areas represent the company's long-term layout for the future, whether in autonomous driving, life sciences or sustainable development, and are expected to play a strategic value in the coming years.
Overall, Alphabet's second quarter financial report shows that AI applications have shifted from "exploration" to "implementation", with gains in search advertising, cloud services, and the development of the Gemini model ecosystem. As AI applications continue to deepen, Google's technology layout and platform integration advantages will become the key pillars of its continued growth in the coming quarters.
