JFrog stock rises as Cantor Fitzgerald maintains Overweight rating after strong Q2
Investing.com - Shares of Alphabet (NASDAQ:GOOGL) rose more than 2% in early U.S. trading on Thursday after the tech giant reported second-quarter results ahead of Wall Street estimates and raised its 2025 capital spending outlook.
The Google parent posted earnings per share of $2.31, above analysts’ expectations of $2.17. Revenue for the quarter rose to $96.43 billion, compared with a consensus estimate of $93.9 billion.
The company said it now expects capital expenditures to reach about $85 billion in 2025, up from a prior forecast of $75 billion, as it ramps up investment in artificial intelligence and cloud infrastructure. It is ahead of the analyst estimate of $73.31 billion and represents a 13.3% jump from last year.
Google has been folding AI into its search business recently to fend off intensifying competition from startups like OpenAI and Perplexity.
AI also represents a major opportunity for Alphabet’s advertising segment, allowing the company to present firms with ad campaigns that can squeeze out more returns. Total (EPA:TTEF) ad sales came in at $71.3 billion for the quarter, up 10.4% year-on-year, while its core search business expanded by 11.7%.
CEO Sundar Pichai said the quarter saw “robust growth across the company,” citing momentum in its search, YouTube, and cloud business, which now has an annual revenue run-rate exceeding $50 billion. Google’s cloud segment, which offers computing power to data centers, posted a 32% increase in sales to $13.6 billion.
“With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures in 2025 to approximately $85 billion and are excited by the opportunity ahead,” Pichai said in the statement.
During the earnings call, Pichai highlighted the use of AI in search. "AI Mode has launched in the U.S. and India, and is going well, while AI Overviews now has over 2 billion monthly users across more than 200 countries and territories and 40 languages," he said. He added that AI Overview, which aims to synthesize user searches above traditional website links, is now driving over 10% more queries globally for the types of queries that show them. This growth is continuing to increase over time, Pichai said.
He noted that Waymo -- Google’s autonomous driving division -- is scaling in size and has now autonomously driven over 100 million miles on public roads. The service is testing across more than 10 cities this year, including New York and Philadelphia.
"AI is driving momentum across [Alphabet’s] business units, and management also signaled that it has been additive to queries," analysts at KeyBanc said in a note. "While capex was indicated higher, our sense is that Alphabet is reinvesting from a position of strength."
(Scott Kanowsky and Frank DeMatteo contributed reporting.)