Google parent company letter Second-quarter earnings are scheduled to be released after the market close on Tuesday.
Here's what analysts expected:
- Earnings per share: $1.84, according to LSEG
- income: $84.19 billion, according to LSEG
Wall Street is also paying attention to several other numbers from the report:
- YouTube ad revenue: $8.93 billion, according to StreetAccount
- Google Cloud revenue: $10.2 billion, according to StreetAccount
- Traffic Acquisition Cost (TAC): $13.54 billion, according to StreetAccount
Analysts will be watching whether Alphabet, which has outperformed other Internet and software giants this year, can maintain steady growth amid tougher comparisons with the previous year. They expect modest growth in key areas such as cloud and overall revenue after a quarter of leadership changes, artificial intelligence announcements and market expansion.
In the second quarter, Alphabet made a number of expansion updates, including its self-driving car unit Waymo, which opened its services to all San Francisco users. The move is Waymo's second citywide rollout, following its debut in the Phoenix metropolitan area in 2020.
In May of this year, Alphabet held its annual developer conference and announced a series of new artificial intelligence products, including a new large-scale language model called Gemini 1.5 Flash, which can quickly summarize conversations, add subtitles to images and videos, and Extract data from large files and tables.
The company also launched AI Overview, which CEO Sundar Pichai called the biggest change in search in 25 years, to a limited audience, allowing users to see a summary of answers to their queries at the very top of Google searches.
However, the earnings period also brought criticism for some of these new products.
Although Google had been working on the AI overview for more than a year, users quickly noticed that queries were returning answers that didn't make sense or were inaccurate, and they had no way to opt out. Widely circulated results include the false statement that Barack Obama is the first Muslim president of the United States, a suggestion that users try adding glue to pizza, and a suggestion to try Eat at At least one stone a day.
While Google has announced several fixes to address AI overview issues, it's just the latest of several mishaps the search giant has had as it rolls out AI products, leading some to question whether the company can compete with Launch AI products quickly and safely. It's unclear how much revenue these new products will generate from users and advertisers — a key topic of discussion expected on Alphabet's earnings call.
According to information obtained by CNBC, Google search chief Liz Reid told employees at a recent all-hands meeting that the company “won't always find everything” when it comes to artificial intelligence errors. Reed urged employees to continue promoting AI products and suggested they could fix bugs as users and employees find them.
Alphabet also announced its new chief financial officer, Anat Ashkenazi, who comes from Eli Lily, the world's most valuable drugmaker. Ashkenazi begins his tenure on July 31, succeeding Ruth Porat, who already serves as Alphabet's president and chief investment officer.
Alphabet continued to tighten its belt this quarter, including cutting more than 100 people from multiple teams in its Google Cloud unit, one of its fastest-growing businesses. The company also laid off at least 200 employees from its “core” engineering team and moved some positions to India and Mexico, CNBC reported.
As belt-tightening and budget reallocations continue this season, company leaders are facing employee complaints about a “significant drop in morale,” CNBC found, citing a lack of trust, reduced resources, tight deadlines and fewer opportunities for internal advancement. The complaints come as the company is trying to maintain a positive image as a top employer while chasing top technology talent amid the fiercely competitive artificial intelligence boom.
Alphabet will also face challenges from cybersecurity firm Wiz, which said on Monday it was abandoning a $23 billion deal with Google. The acquisition could help boost Google's cloud unit's revenue.