Alphabet is giving investors an inch and taking a yard. The parent of search giant Google reported second-quarter earnings on Wednesday that comfortably outpaced what analysts expected, and said its prodigious investment is creating visible results. So it is spending more — much more. Expect this to set the tone for the next phase of Silicon Valley’s AI race.
Parent company Alphabet reported 14 per cent revenue growth for the three months ending in June, including a 12 per cent increase in search revenue, and 32 per cent in cloud computing. All comforting numbers for investors who might have feared that economic weakness, or the impact of tariffs on advertisers, could be weighing on growth.
Google’s future, however, hangs on bigger, and vaguer, considerations. The big question is what effect chief executive Sundar Pichai’s massive spending plans will have on its AI products, what effect those products will have on its users, and what their response will do to revenue. There are a lot of variables; mostly, the answers seem to be encouraging.