Google parent and Microsoft see third-quarter profits surge

Microsoft and Google’s parent Alphabet reported a surge in second-quarter profits, as the two tech giants looked to push their developments in so-called artificial intelligence (AI).

Alphabet said in a statement its net profits topped $18.4 billion (€16.6 billion) in the quarter to the end of June. That compared with $16 billion a year earlier.

Revenue increased 9 per cent to $74.6 billion on a constant currency basis compared with a year ago, which strips out the impact of foreign exchange movements.

“There’s exciting momentum across our products and the company, which drove strong results this quarter,” Sundar Pichai, chief executive of Alphabet and Google, said. “Our continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search, and improving all our services.”

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Chief financial officer Ruth Porat will assume the newly created role of president and chief investment officer of Alphabet and Google, the company said, putting her in prime position as a future chief executive of the business. She will take on the role from the start of September.

“Ruth will continue to serve as CFO, including leading the company’s 2024 and long-range capital planning processes, while the company searches for and selects her successor,” Alphabet said.

Google laid off about 240 of its 5,000 employees in Ireland earlier this year as part of firm-wide cuts.

The company took a $2 billion charge related to its lay-offs in the first six months of the year, as well as $633 million in charges tied to “actions to optimise our global office space”.

The company, which owns several offices in central Dublin, “may incur additional charges in the future as we further evaluate our real estate needs”, it added.

Meanwhile, Microsoft posted a net profit of $20.1 billion – up 23 per cent on a constant currency basis versus a year ago, for its quarter.

Revenue rose 10 per cent to $56.2 billion, the Seattle-based firm said in a statement. Much of the growth was driven by Microsoft’s cloud business, where revenue increased by close to a quarter.

The firm, which employs about 3,500 people in Ireland, has laid off about 250 staff here in recent months as part of a wider round of cuts across its global business.

Not surprisingly, company chief executive Satya Nadella emphasised his company’s current market-leading position in the growth of so-called generative artificial intelligence tools like Chat GPT.

“Organisations are asking not only how – but how fast – they can apply this next generation of AI to address the biggest opportunities and challenges they face – safely and responsibly,” Mr Nadella said in the statement. “We remain focused on leading the new AI platform shift, helping customers use the Microsoft Cloud to get the most value out of their digital spend, and driving operating leverage.”