Google-parent Alphabet has become the first company in the world to report more than $100 billion in quarterly profit, setting a new corporate record. In its second-quarter earnings released on July 22, the company posted a net income of $112.1 billion, nearly four times higher than a year ago. According to Fortune, the figure is more profit in three months than 459 Fortune 500 companies generate in total annual revenue. Helped by an 82% jump in Google Cloud revenue, Alphabet’s revenue rose 24% year over year to $119.8 billion. The record earnings were also driven by massive gains from the company’s investments in artificial intelligence firm Anthropic and Elon Musk’s SpaceX.Google CEO Sundar Pichai said the results show that the company’s “full stack approach to AI is delivering real, measurable value.”
Google booked $99 billion in “other income”
A footnote in Alphabet’s Q2 earnings release revealed that a large part of the record profit came from $99 billion in “other income”, which included “unrealized and realized gains” from Alphabet’s investment portfolio. According to the company’s earnings release, these gains added $77.1 billion to its net income after taxes.Much of these investment gain came from Alphabet’s stakes in Claude-maker Anthropic and Elon Musk-owned space company SpaceX, both of which saw their valuations rise sharply during the quarter.Alphabet has invested $300 million in Anthropic in 2023, and that investment has since grown significantly. The companies also have a cloud partnership under which Anthropic has agreed to buy large amounts of computing capacity from Google Cloud, supporting the cloud business’s rapid growth.Similarly, Alphabet owns a roughly 6% stake in SpaceX that went public last month at a valuation of $1.77 trillion. These paper gains helped bolster Alphabet’s investment portfolio and flowed through to its bottom line.Despite the record earnings, Alphabet shares fell about 3% in after-hours trading. Investors remained concerned about the company’s rising spending on AI infrastructure and increasing competition for its Gemini family of AI models.
Leave a Reply