Google Revenue Soars on AI Boom, and Investors Eye Spending Surge
Search giant is spending tens of billions of dollars on infusing its products with artificial-intelligence capabilities.
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Google’s parent company reported a 14% jump in year-over-year revenue, driven by growth in its cloud and search divisions that was tempered by heavy spending on artificial intelligence.
The parent company, Alphabet , had record sales of $96.4 billion in the second quarter but also said capital expenditure expectations for the year would increase by 13% to about $85 billion. That compares with $52.5 billion in 2024.
Alphabet’s shares rose by more than 1% in after-market trading.
Google Chief Executive Sundar Pichai and other tech executives have poured tens of billions of dollars into AI development over the past few years as part of the broader AI boom . Much of that money has gone to build new data centres to develop and run AI models.
Google’s results were the first in a series of quarterly tech earnings, with Microsoft, Apple, Amazon and Meta Platforms reporting next week. Investors are keeping a close watch on spending levels at most of the biggest companies, which have ballooned as they seek to stay ahead in an escalating AI arms race.
Google’s results are unique in that its cloud division, which sells computing power in data centres, is a beneficiary of the AI boom, while its search business faces threats from users who are migrating toward AI products such as OpenAI’s ChatGPT.
Other areas of the company are spending at a fast clip to bring AI tools into its popular products like search and YouTube.
The cloud unit brought in $13.6 billion in second-quarter revenue. That was up 32% from the previous year, compared with 28% in the first quarter.
Alphabet reported total ad sales of $71.3 billion in the second quarter, an increase of 10.4% from the same period a year earlier. Google’s search division, which is core to the advertising business, grew 11.7%.
MoffettNathanson analyst Michael Nathanson said Google executives helped to allay shareholder concerns about the future of its search business, even if traffic volume declines.
“What people worry about is just the math around search,” he said. “Isn’t AI going to be a negative to search? And they went out of the way many times on the call to say, ‘That’s not what we’re seeing.’”
Google has for years been working to cut costs to help fund AI spending. The company at several points this year extended voluntary buyout offers to employees in multiple divisions.
To get ahead in the AI race, Google has been improving the capabilities of its own AI model and chatbot, known as Gemini, and adding AI features to many of its products. In May, it overhauled its classic search engine with the U.S. introduction of “AI Mode,” which answers search queries in a chatbot-style conversation with fewer links.
Investors have expressed concern about the potential outcome of an antitrust lawsuit targeting Google’s search dominance. A U.S. district judge overseeing the case is expected to rule next month on whether he should impose limits on Google, including putting curbs on how it competes in AI.
The decision will come after a monthslong trial that dealt extensively with just how much new AI players may erode Google’s search monopoly.
The Justice Department, which brought the case against Google in 2020, has proposed forcing the sale of its Chrome browser, preventing Google from being able to pay Apple to be its default search engine and requiring it to share data with competitors.
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With US$40 million already committed, the Global Talent Fund is attracting investor attention with a strategy focused on building globally scalable consumer brands alongside high-profile talent.
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A new investment fund targeting celebrity-founded consumer brands has secured US$40 million in commitments and is rapidly approaching its US$50 million fundraising target, signalling growing investor appetite for alternative opportunities beyond traditional asset classes.
The Global Talent Fund, which has a maximum raise of US$100 million, focuses on building and investing in consumer businesses alongside celebrities, athletes, and influential personalities who play an active role as co-founders rather than simply endorsing products.
The strategy is based on the belief that changes in consumer behaviour, particularly the rise of social media and digital engagement, have fundamentally altered how brands are built and scaled.
GTF founding partner Jeremy Hunt, who is helping lead the fund’s strategy, said consumers increasingly feel connected to personalities they follow online and are more willing to support products developed by those individuals.
“Consumers are searching for content to engage with, and when a celebrity they like or follow takes them on the journey of creating a product or brand, they genuinely feel part of that process,” he said.
The fund is targeting high-growth consumer sectors including wellness, hydration, beauty and recovery, areas Hunt believes continue to benefit from strong global demand and ongoing innovation.
Rather than backing celebrity endorsement deals, the fund is seeking businesses where talent is deeply involved in product development, brand creation and long-term growth.
According to Hunt, authenticity remains one of the biggest differentiators between successful celebrity-backed brands and those that fail.
“The consumer can see clearly if someone is simply being paid to promote a product,” he said. “The winners are typically the brands where the celebrity has genuinely helped build the business from the ground up.”
The model has attracted support from several prominent Australian investors and business families, reflecting broader interest in alternative investments with global growth potential.
Hunt said consumer brands offered a level of tangibility that many investors found appealing.
“Consumer brands are what we touch, feel, smell and taste every day,” he said. “Our investors understand the growth potential in the model, but they also want to be part of the journey.”
The fund’s rapid progress towards its fundraising target comes amid growing recognition that celebrity influence, when combined with strong commercial execution and scalable business models, can create significant enterprise value.
With several high-profile celebrity-founded businesses generating billion-dollar exits in recent years, supporters of the strategy believe the opportunity remains in its early stages.
For more information, contact marc@kanerbridge.com.au
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