Google parent company Alphabet reported quarterly earnings that beat market expectations, but its cash flow turned negative as a result of AI infrastructure investments.
Alphabet announced on the 22nd (local time) that its second-quarter revenue increased by 24% year-over-year to $119.8 billion (approximately 177 trillion won).
This exceeded the market consensus of $116.9 billion compiled by market research firm London Stock Exchange Group (LSEG).
By sector, growth in the cloud division was the most prominent.
Google Cloud revenue surged 82% year-over-year to $24.8 billion, driven by increasing enterprise demand for AI and infrastructure.
The cash-cow search division and YouTube advertising division posted revenues of $63.2 billion and $11.1 billion, respectively.
However, revenue for the "Other Bets" segment, which includes autonomous driving taxi Waymo, remained at $382 million, posting an operating loss of $1.8 billion.
Earnings per share (EPS) came in at $9.11, more than three times Wall Street's expectation of $2.89.
Explaining the surge in EPS, Alphabet stated that it was "driven by net unrealized gains on equity securities."
This is interpreted as being due to an increase in the value of equity stakes held by Alphabet following the listing of Elon Musk's space company SpaceX and a rise in the corporate value of AI firm Anthropic.
Capital expenditures for the second quarter, which drew significant attention, stood at $44.9 billion (approximately 66.3 trillion won), similar to the market estimate of $44.8 billion compiled by StreetAccount.
However, in the wake of continuous capital expenditures, second-quarter free cash flow (FCF) recorded a negative $5.86 billion.
After posting over $24 billion in FCF in the third and fourth quarters of last year, Alphabet's FCF dropped to the $10 billion level in the first quarter of this year before turning negative this time.
This means cash spent on investments such as plants and equipment exceeded cash generated from operating activities.
Still, the trailing 12-month FCF reached $53.3 billion.
Chief Executive Officer Sundar Pichai emphasized, "Our AI investments are redefining the horizon of possibilities across all areas," adding, "This outstanding performance demonstrates that our differentiated full-stack AI approach is delivering real and measurable value to customers."
Pichai introduced that about 90% of Fortune 100 companies have adopted the enterprise Gemini model, and monthly active users (MAU) of the Gemini app have reached 950 million.
He also added that application programming interface (API) tokens processed by the Gemini model reach 22 billion per minute.
(Photo: AP, Yonhap News)
※
Copying, redistribution, and unauthorized use in AI training are strictly prohibited.