Google parent Alphabet on Wednesday delivered second-quarter earnings and revenue that topped consensus estimates while internet search advertising and cloud computing revenue came in above expectations. But Google stock wavered as the company hiked estimated 2025 capital spending amid soaring artificial intelligence investments.
Google stock initially fell on the earnings report, then rebounded in extended trading.
Reported after the market close, Google earnings for the quarter ending June 30 rose 22% to $2.31 per share. The tech giant reports Google earnings under generally accepted accounting principles, also known as GAAP.
In Q2, Google's gross revenue rose 14% to $96.43 billion amid headwinds from currency exchange rates.
Analysts polled by FactSet had projected EPS of $2.18 on revenue of $93.99 billion.
Capital Spending Guidance Hiked
Google said it expects capital spending to reach $85 billion in 2025, up from earlier guidance of $75 billion. With the updated guidance, capital spending is expected to jump 62% in 2025, up from a 43% increase.
"The step-up in capital spending is reflective of the company leaning in behind strong demand it's seeing across cloud products and services," said Truist Securities analyst Youssef Squali in a report.
At Evercore ISI, analyst Mark Mahaney said investors should monitor operating margins. Like Microsoft, which recently announced job cuts, Google is using AI internally for software coding projects.
Google Stock Earnings: Search Revenue Beats
"As the company ramps capital spending, will AI-driven efficiencies support more disciplined headcount growth,?" Mahaney asked in a report.
Also, Google's Q2 internet search-advertising revenue came in at $54.19 billion versus estimates of $52.915 billion.
Further, Google reported cloud-computing revenue of $13.62 billion versus estimates of $13.14 billion.
Meanwhile, YouTube ad revenue was $9.79 billion versus estimates of $9.58 billion.
On the stock market today, Google stock gained over 3% to 196.24 in extended trading. With a strong July, Google stock is about even in 2025.
GOOGL Stock Technical Ratings
Google is among AI stocks to watch.
Heading into the Google earnings report, the tech giant had an entry point of 207.05 from a cup base. Google stock traded about 8% below the entry point.
Also, Google stock owns an Accumulation/Distribution Rating of B-minus. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Further, Alphabet stock holds an IBD Composite Rating of 94 out of a best possible 99, according to IBD Stock Checkup.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
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