Google parent firm Alphabet posted a 28.6% year-on-year boost in profits in the second quarter of 2024, despite a $2.3 billion loss from its AI research division.

According to a Q2 earnings filing, Alphabet reported net income of $23.6 billion in the quarter and $84.7 billion in revenue — smashing Zacks Investment Research’s estimate by over $14 billion.

Its reported loss from “Alphabet-level activities” nearly doubled from $1.2 billion in Q2, 2023, to $2.3 billion.

Google parent Alphabet profit surges 29% in Q2 amid AI splurge image 0 Alphabet’s AI spending for its DeepMind and Google Research organizations. Source: Alphabet

In an FAQ, Alphabet has described “Alphabet-level activities” as primarily including AI-focused shared research and development activities and development costs of AI models, among other corporate costs.

This includes AI-related spending via Google’s DeepMind and Google Research, which is experimenting with ways to implement AI into its advertisement and cloud businesses.

“[There’s been] tremendous ongoing momentum in search and great progress in cloud, with our AI initiatives driving new growth,” Alphabet’s CEO Sundar Pichai said in the company’s Q2 earnings call.

The CEO noted Alphabet’s cloud business topped $10 billion in revenue for the first time, producing a $1 billion operating profit for the quarter.

“Our AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenue and are being used by more than two million developers.”

Alphabet’s Q2 beats estimates

Alphabet revenue in Q2 was 14% higher than the prior year period, with the lion’s share of revenue again coming from Google and YouTube advertisements.

Google parent Alphabet profit surges 29% in Q2 amid AI splurge image 1 Visual of Alphabet’s Q2 2024 financial statement. Source: App Economy Insights

Related: Microsoft, Google and others warn AI may threaten business

Shares in Alphabet Inc Class A (GOOGL) remained flat on July 23 before falling over 2% after the firm released its financial statement.

Google parent Alphabet profit surges 29% in Q2 amid AI splurge image 2 GOOGL’s change in share price on July 23. Source: Google Finance

GOOGL is currently up 31.5% so far in 2024, beating Microsoft (MSFT), Apple (AAPL) and Amazon (AMZN) at 20%, 21.1% and 24.3%, respectively.

However, all three stocks trail GPU chipmaker Nvidia’s (NVDA) performance this year. The company increased 154.5% in 2024 and briefly surpassed Apple and Microsoft as the world’s most valuable company last month.

Magazine: $1M bet ChatGPT won’t lead to AGI, Apple’s intelligent AI use, AI millionaires surge: AI Eye