Google owner Alphabet (NASDAQ:GOOGL) reported on Tuesday its financial results for the fiscal second quarter, exceeding most analyst expectations.
The company’s earnings per share (EPS) came in at $1.89, slightly above the consensus estimate of $1.83. Revenue for the quarter reached $84.74 billion, also above the average analyst projection of $84.16 billion.
The strong performance was mainly driven by the robust results from Google's Search and Cloud services. Notably, the Cloud business surpassed $10 billion in quarterly revenue for the first time, significantly contributing to the overall 14% revenue increase compared to the same quarter last year.
Alphabet's CEO, Sundar Pichai, credited the successful quarter to the "ongoing strength in Search and momentum in Cloud," while highlighting the company's advancements in AI and infrastructure leadership.
Google's advertising revenue came in at $64.62 billion, slightly higher than the estimated $64.53 billion. However, YouTube ad revenue fell short of expectations, reporting $8.66 billion against the estimated $8.95 billion.
The company's operating margin was 32%, just above the forecasted 31.8%. Alphabet's capital expenditures were $13.19 billion, higher than the anticipated $12.23 billion, driven by ongoing investments in its core and emerging businesses.
Analysts discuss Google stock after Q2 results
Evercore ISI: “We reiterate our Outperform on GOOGL in the wake of a Modest Beat Q2 EPS print, maintaining our PT at $225.”
“The bar was high for GOOGL this quarter and largely met – strong Search growth, Operating Margin upside & Cloud growth acceleration. The ointment flies were a) The YouTube Ads revenue miss, tho the growth decel (8 pts) can largely be explained by the tougher comps (7 pts); and b) the muted Q3 Operating Margin commentary, tho we view this largely as a Pixel launch timing factor and continue to believe that GOOGL is a new margin expansion story going forward.”
Citi: “With ~14% Y/Y Search revenue growth, accelerating Google Cloud revenue growth to +29% Y/Y, and margins expanding 310 bps Y/Y, we emerge from 2Q24 earnings incrementally positive on shares of Alphabet.”
“Given strong Search results, it underscores our view that the broader advertising environment— and DR in particular—is healthy and strengthening (which we believe bodes well for Meta (NASDAQ:META), Pinterest (NYSE:PINS), Reddit and Snap, among others), that Google’s GenAI tools are gaining traction, and that margin expansion should continue; we reiterate our Buy rating and raise our TP to $212.”
Bank of America (NYSE:BAC): “Strong 2Q search and Cloud results reinforce our thesis that Google is a net Al beneficiary, while strong expense discipline sets up 2H for strong y/y margins. Some cautious call commentary on ad comps and growing 3Q depr. expense could be a near-term sentiment overhang after a clean 1Q, but we expect search to remain relatively strong, driven by AI. At the AH price of $179.6, we see stock as attractive at ~21x 2yr forward GAAP EPS vs S&P at 20x.”
Wedbush: “Google continues to validate its position as a leading AI beneficiary, as management commentary has been encouraging regarding both consumer adoption of AI Search features and enterprise demand for AI agents and other services within Cloud.”
“We think the progress Google has made with AI search results over the last two quarters should help to alleviate investor concerns regarding the structural risks of generative AI to Search.”
JPMorgan (NYSE:JPM): “We believe GOOGL’s strong 2Q Search results, combined w/ further positive commentary on AI Overviews, will allay near-term fears around market share & competition, though it will take time to work through long-term debates.”
“We remain positive on GOOGL shares & are establishing a December 2025 PT of $208 (up from prior Dec ‘24 PT of $200) based on ~20.5x our ‘26E GAAP EPS of $10.16.“