.July 24, 2024 10:26:00 AM

Alphabet (NASDAQ:GOOG) exceeded revenue and profit expectations in the second quarter, driven by strong digital advertising sales and cloud computing demand. However, the company warned of continued high capital expenditures for the year, causing shares to drop over 3% in pre-market trading.

The surge in digital ad sales was influenced by events like the Paris Olympics and elections, while enterprise spending rebounded, benefiting Alphabet’s software business. The adoption of generative AI technology in the cloud segment also contributed to growth.

Alphabet’s advertising revenue rose 11% to $64.6 billion, with search product enhancements improving ad targeting. Net income for the quarter increased by 28.6% to $23.6 billion, surpassing estimates.

Cloud computing revenue grew by 28.8% to $10.35 billion, exceeding expectations. Despite the strong performance, Alphabet reported high capital expenditures of $13 billion for the quarter, with plans to maintain this level for the rest of 2024.

Alphabet is heavily investing in AI technology, aiming to expand offerings and drive revenue through improved efficiency and cost savings. CEO Sundar Pichai reassured investors that AI would be expanded globally, despite initial challenges with search results.