Google parent Alphabet beats Q2 revenue, profit estimates on strong ads, cloud By Reuters

By Greg Bensinger and Yuvraj Malik

(Reuters) – Alphabet (NASDAQ:) beat second-quarter revenue and profit estimates on Tuesday, driven by a rise in digital advertising sales and healthy demand for its cloud computing services.

The shares rose about 2% after dipping slightly in after-market trading. They had gained more than 30% this year.

Net income in the quarter ended June 30 rose 28.6% to $23.6 billion, besting the average estimate of $22.9 billion.

Advertising sales, Alphabet’s chief revenue source, rose 11% to $64.6 billion. The company sells ads in its search product using customer data to better target them.

Alphabet’s results underscore robust demand for digital ads, driven by events like the Paris Olympics and elections in several countries including the U.S., while a recovery in enterprise spending is boosting is software business.

“This was another stellar quarter from Google with beats across the board,” said Ido Caspi a research analyst with Global X, citing ad sales and artificial intelligence offerings as drivers.

Revenue grew 14% to $84.74 billion, compared with analysts’ consensus estimate of $84.19 billion according to LSEG data.

Revenue from cloud computing services, a widely watched barometer for the health of enterprise technology spending, rose 28.8% to $10.35 billion. Analysts had expected $10.16 billion.

Despite heightened regulatory scrutiny, Google had been pursuing its largest acquisition ever, a roughly $23 billion buyout of cybersecurity firm Wiz. But Wiz told employees on Monday it was walking away from the deal and would instead pursue going public.

Google also held talks to acquire customer relationship management firm HubSpot (NYSE:) before walking away from it earlier this month. The deal would have turned Alphabet into a rival of Salesforce (NYSE:), Oracle (NYSE:) and others in that market.

Google said on Monday it is planning to keep third-party cookies in its Chrome browser backtracking function after years of pledging to phase out the tiny packets of code used to track internet searches.

It marked a major reversal after advertisers expressed concerns that the loss of cookies would limit their ability to collect and parse information for personalizing ads, making them dependent on Google’s user databases.

Sales for the Mountain View, California company’s so-called “other bets,” including experimental projects and its self-driving car unit Waymo, rose 28% to $365 million.

Ad sales in its YouTube division rose 13% to $8.67 billion.