Alphabet (GOOG, GOOGL) reported second quarter earnings on Tuesday after the market close that beat estimates on the top and bottom lines, sending the stock up as much as 6% on Wednesday.
The Google parent company reported revenue of $74.6 billion, beating expectations for $72.75 billion while reporting earnings per share of $1.44, more than the $1.32 expected by analysts.
Alphabet also announced its CFO Ruth Porat would take the newly created role of president and chief investment officer.
Google ad revenues totaled $58.14 billion in the quarter, better than the $57.5 billion expected and $56.3 billion reported in the same period last year. YouTube ad revenues also topped estimates, reaching $7.66 billion against forecasts for $7.41 billion. In the prior year period, YouTube ad revenue totaled $7.34 billion.
The company also reported another profit for its Google Cloud business, which first turned a profit in the first quarter of this year. Google Cloud revenues totaled $8 billion with income for the segment totaling $395 million, better than the $590 million loss for the segment reported in the same quarter last year.
Alphabet's total operating income totaled $21.8 billion for the quarter.
"Our continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search, and improving all our services," Alphabet and Google CEO Sundar Pichai said in a statement. "With fifteen products that each serve half a billion people, and six that serve over two billion each, we have so many opportunities to deliver on our mission."
In a note to clients on Wednesday, Justin Post at Bank of America Global Research noted the quarter "helped address relative revenue growth concerns vs peers with accelerating Search and YouTube growth, and had ad results/commentary supporting our thesis that Alphabet will be a net beneficiary of AI."
Post and his team raised their price target on the stock to $146 from $142 following the report.
Needham analyst Laura Martin, who raised her price target on Alphabet to stock to $140 from $115 on Wednesday, wrote the rise of ChatGPT and the "existential threat" to Google's Search business "awakened the sleeping giant" that is Alphabet.
The company's Other Bets segment, which will fall under Porat's purview in her new job, reported an operating loss of $813 million in the quarter, narrower than the $1.34 billion loss seen in the same period last year.
These across-the-board beats in ad and cloud revenue link back to Google's cost-cutting efforts of this year and last, which most publicly involved Alphabet in January announcing plans to cut 12,000 employees.
"Our financial results reflect continued resilience in Search, with an acceleration of revenue growth in both Search and YouTube, as well as momentum in Cloud," Porat said in a press release. "We continue investing for growth, while prioritizing our efforts to durably reengineer our cost base company-wide and create capacity to deliver sustainable value for the long term."
Porat — who's Google and Alphabet's longest-tenured CFO to date — will start in her new role on Sept. 1, also retaining her role as CFO. Porat will continue reporting to Pichai.
"Ruth has worked to drive financial discipline and returns for shareholders, while spearheading investment to create sustainable, long-term value," Pichai said.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.
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