Alphabet Steams Past Lingering Ad Worries, Fueled by Google’s Search Engine

Alphabet, Google’s parent company, continued to gain ground against an advertising slump that had threatened its lofty profits, reporting revenue that surpassed Wall Street’s expectations, signaling the resilience of its search engine.

Alphabet posted $74.6 billion in quarterly sales on Tuesday, up 7 percent from a year earlier and besting analysts’ estimate of $72.9 billion, according to data compiled by FactSet.

The internet giant said that its profit climbed 15 percent, to $18.4 billion, in the second quarter, beating Wall Street’s expectations of $17.1 billion.

Google and other companies dependent on digital advertising, such as Meta and Snap, have looked to reverse an ad spending slump caused by economic uncertainty, rising interest rates and inflation. In a statement, Google said it was aided by accelerating revenue from its search engine and video platform YouTube in the second quarter.

Despite concerns of growing competition in artificial intelligence for Google, from the ChatGPT chatbot and the Microsoft search engine Bing, Google’s search engine has so far remained a central gateway to the web for billions of users. That has helped the company convince more advertisers that its sites remain a reliable way to reach consumers.

The company has tried to refocus in other ways by shedding some projects that lacked promise, laying off 12,000 workers and consolidating two of its A.I. labs to accelerate research in recent months. In May, Google introduced a number of A.I. features and products at its annual conference, finally responding to ChatGPT’s maker, OpenAI, and Microsoft. But it remains too early to tell how these A.I. tools will affect Google’s revenue expansion or bottom line, if at all.

Google also announced on Tuesday that Ruth Porat, its longest-serving chief financial officer, would assume a newly created role of president and chief investment officer starting on Sept. 1. In that position, she will be responsible for Alphabet’s experimental businesses, called Other Bets, and will engage with policymakers around infrastructure, economic opportunities and other matters. Ms. Porat, who has been at Google since 2015, will remain chief financial officer until the company can find a successor.

Revenue from Google’s search engine, its largest business, rose 5 percent to $42.6 billion in the second quarter, just above analysts’ estimate of $42.2 billion.

Advertising sales at YouTube climbed 4 percent to $7.7 billion, above the $7.4 billion expected by analysts. The division had reported declining revenue in recent quarters, amid increased competition from TikTok, but it finally reversed that slide.

Google Cloud, the company’s division that offers software and technology services to other businesses, recorded sales that increased 28 percent to $8 billion. Analysts had estimated $7.9 billion. The division, which had long lost money until the first quarter, reported an operating profit of $395 million in the second quarter.