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Alphabet calms previous concerns over advertising driven by Google’s search engine

Alphabet, Google’s parent company, continued to make gains despite an advertising slump that threatened its lofty profits, reporting revenue that exceeded Wall Street’s expectations, a sign of the resilience of its search engine.

Alphabet reported $74.6 billion in quarterly sales on Tuesday, up 7 percent from a year ago and beating analysts’ estimates of $72.9 billion, according to data compiled by FactSet.

The Internet giant said its second-quarter profit rose 15 percent to $18.4 billion, beating Wall Street’s $17.1 billion expectation.

Google and other companies that rely on digital advertising, such as Meta and Snap, have tried to reverse a decline in ad spending due to economic uncertainty, rising interest rates and inflation. In a statement, Google said it was aided by growth in revenue from its search engine and video platform YouTube in the second quarter.

Despite concerns of growing competition in artificial intelligence to Google from the ChatGPT chatbot and Microsoft search engine Bing, Google’s search engine remains the web’s central gateway for billions of users. This has helped the company convince more advertisers that its sites remain a reliable way to reach consumers.

The company has tried to refocus in recent months by laying off 12,000 employees and consolidating two of its AI labs to accelerate research, while shedding some projects that lack promise. In May, Google introduced several AI features and products at its annual conference, ultimately responding to OpenAI, the creator of ChatGPT, and Microsoft. But it’s too early to tell how these AI tools will affect Google’s revenue expansion or profits.

Google also announced Tuesday that Ruth Porat, its longest-serving chief financial officer, will assume the newly created role of president and chief investment officer effective September 1. In that position, she will be responsible for Alphabet’s experimental businesses, called Other Bets, and will engage with policymakers around infrastructure, economic opportunity and other matters. Ms Porat, who has been at Google since 2015, will remain chief financial officer until the company finds a successor.

Revenue from Google’s search engine, its biggest business, rose 5 percent to $42.6 billion in the second quarter, slightly above analysts’ estimates of $42.2 billion.

Ad sales on YouTube rose 4 percent to $7.7 billion, more than the $7.4 billion expected by analysts. The division had reported a decline in revenue in recent quarters, amid increasing competition from TikTok, but that decline was eventually reversed.

Google Cloud, the company’s division that provides software and technology services to other businesses, reported sales that grew 28 percent to $8 billion. Analysts had estimated $7.9 billion. The division, which had lost money for a long time until the first quarter, reported an operating profit of $395 million in the second quarter.

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