Alphabet’s GOOGL second-quarter 2024 results, scheduled to be released on Jul 23, are likely to reflect gains from its strengthening cloud service offerings.
The company’s cloud services arm — Google Cloud — has become the key catalyst behind its business growth.
Alphabet’s cloud offerings include Google Cloud Platform and Google Workspace, which have been continuously gaining momentum in the booming cloud computing market. Google’s growing investments in infrastructure, security, data management, analytics and generative AI have been major positives.
The Google Cloud segment, which derives revenues from fees collected for Google Cloud Platform services and Google Workspace collaboration tools, has constantly been driving substantial revenue growth for Alphabet.
In first-quarter 2024, Google Cloud revenues rose 28.4% year over year to $9.6 billion, accounting for 11.9% of the quarter’s total revenues.
For second-quarter 2024, the Zacks Consensus Estimate for Google Cloud revenues is pegged at $10.08 billion, suggesting growth of 25.5% from the year-ago quarter’s reported figure.
Click here to know how the company’s overall second-quarter results are likely to be.
Alphabet Inc. Price and Consensus
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Factors to Consider
GOOGL’s efforts in integrating data lakes, data warehouses, data governance and advanced machine learning into a single platform are expected to have bolstered its prospects in the cloud market in the to-be-reported quarter.
Its strong cloud services portfolio, and expanding network of data centers, availability zones and regions are likely to have contributed well to Google Cloud revenues.
Robust real-time data, analytics and AI, along with its open and scalable cloud infrastructure, are expected to have helped win customers in the to-be-reported quarter.
The company’s deepening focus on generative AI is anticipated to have been a major positive. Solid momentum in Gemini is expected to have benefited Google Cloud’s second-quarter performance.
The company’s launch of an enterprise-focused AI code completion and assistance tool, Gemini Code Assist, is likely to have driven its momentum across various enterprises.
The growing momentum with the Vertex AI platform is likely to have contributed well.
Google’s introduction of various open-source tools to support generative AI projects and infrastructure has been a plus. The new tools include MaxDiffusion — a collection of reference implementations of various diffusion models, JetStream — a new engine to run generative AI models, MaxText — a collection of text-generating AI models targeting tensor processing units, and NVIDIA’s NVDA GPUs in the cloud.
Its latest additions to the Gemma family of open models, including Gemma 2, the next generation with a 27-billion parameter model, and PaliGemma, the first vision language model for image captioning, labeling and Q&A use cases, are noteworthy.
These introductions are expected to have favored the underlined segment in the quarter under review.
The solid adoption of generative AI-powered Workspace tools is likely to have been another positive.
The strong capabilities of Google Cloud to identify cyber threats and automate security workflows and responses on the back of generative AI are likely to get reflected in the upcoming results.
Strengthening generative AI capabilities are expected to have driven Google Cloud’s customer momentum.
In the second quarter, Workday WDAY extended its partnership with Google Cloud. Workday is leveraging the latter’s Gemini models and Vertex AI in order to aid in quick AI-powered code generation, troubleshooting and information retrieval.
Cintas CTAS partnered with Google Cloud to develop a generative AI-powered knowledge center to accelerate its digital transformation. Cintas is using Google Cloud’s Vertex AI in order to build its generative AI-backed search engines to empower employees.
Expanding Google Cloud clientele is expected to have driven Alphabet’s second-quarter 2024 top-line growth.
Currently, Alphabet has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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