Google parent Alphabet to invest $5bn in Waymo amid profit and stock surge

Google parent company Alphabet on Tuesday announced a $5 billion multi-year investment in its self-driving unit, Waymo, after its second-quarter profit and revenue passed analysts' estimates.

“This new round of funding will enable Waymo to continue to build the world’s leading autonomous driving company,” Alphabet’s chief financial official and president Ruth Porat said during the earnings call.

Ms Porat said the company is an “important example” of Alphabet’s long-standing investments.

“We are grateful for their immense vote of confidence in our team and recognising the amazing progress we’ve made with our technology, product and commercialisation efforts,” Waymo’s chief executive Tekedra Mawakana said in a post on X.

During the earnings call, Alphabet’s chief executive Sundar Pichai said that Waymo, which has completed 2 million trips thus far, provides 50,000 weekly paid trips, mainly in San Francisco and Phoenix.

In 2020, the company raised $2.25 billion from outside investors. It was followed by another funding round of $2.5 billion in 2021. Last month, Waymo eliminated the waitlist, making its rides available to all users in San Francisco.

Alphabet’s other bets unit, which includes its self-driving car firm Waymo, added $365 million in second-quarter revenue, up from $285 million from the prior year period.

But its losses expanded to $1.13 billion in the June quarter, from $813 million in the same period last year.

The California-based company’s second-quarter total earnings were driven by a surge in advertising sales and increasing demand for its cloud-computing services.

Its total net income in the June quarter jumped 28.6 per cent to $23.6 billion, passing estimates of $22.9 billion.

The company's revenue during the April-June period surged 14 per cent to almost $85 billion, against analysts’ expectations of $84.2 billion.

But advertising revenue from YouTube, the world's largest provider of search and video advertisements, missed analysts' expectations at $8.6 billion.

"The company's massive suite of income-generating offerings did more than enough to offset an otherwise slower-than-expected picture for YouTube ads – a business that has grown tremendously important for Sundar Pichai's bigger plan,” Thomas Monteiro, senior analyst at Investing.com, told The National.

But analysts expect that the Alphabet businesses that did not do particularly well this quarter are likely to pick up a good pace over the next year.

“This is partly due to the expected solid rebound in ad growth as capital costs grow cheaper and smaller companies find themselves with a bit more cash to spare, as well as the need for faster growth,” said Mr Monteiro.

Alphabet’s earnings per share soared 31.2 per cent to $1.89, compared to the expected $1.84.

Sundar Pichai, chief executiveof Alphabet. Bloomberg

Despite better-than-expected earnings, the company’s stock dropped 2.18 per cent to trade at $179.59 a share in after-hours market trading.

However, Alphabet's stock has remained strong in 2024, having risen nearly 32 per cent year-to-date.

It closed almost 0.14 per cent higher at 183.60 a share on Tuesday, giving the company a market value of $2.26 trillion.

On Tuesday, it also announced a cash dividend of 20 cents a share that will be paid on September 16 to stockholders of record as of September 9.

Sergey Brin, one of the company's co-founders, owns more than 730 million Class B and C shares, entitling him to a payout of $146 million.

Another co-founder, Larry Page, who holds 389 million class B shares, is expected to receive almost $78 million.

US market leads in revenue

Alphabet earned more than 48 per cent of its second-quarter revenue, or more than $41.1 billion, from the US market.

In Europe, the Middle East and Africa, the company earned nearly $24.7 billion, or more than 29 per cent of its total sales.

Alphabet’s operating income soared 25.5 per cent on an annual basis in the last quarter to about $27.4 billion.

Google services business – which includes advertisements, Android, Chrome, hardware, Maps and Google Play – accounted for nearly 87.2 per cent of the company’s total sales.

It added almost $73.9 billion to overall revenue, nearly 11.5 per cent more than the second quarter of 2023.

Google’s advertising revenue from Search, YouTube and other businesses increased 11.1 per cent to more than $64.6 billion in the last quarter.

The total revenue from its cloud business grew an annual 28.8 per cent to more than $10.3 billion in the June quarter, exceeding analysts' expectation of $10.2 billion.

The company said this is the first time its cloud division crossed $10 billion in revenue.

It generates revenue mainly from fees received for cloud platform services and workspace collaboration tools.

The company has been investing heavily in artificial intelligence as it integrates generative AI capabilities into its search and other services.

“We are innovating at every layer of the AI stack … our long-standing infrastructure leadership and in-house research teams position us well as technology evolves and as we pursue the many opportunities ahead,” said Mr Pichai.

Student Of The Year 2

Director: Punit Malhotra

Stars: Tiger Shroff, Tara Sutaria, Ananya Pandey, Aditya Seal

1.5 stars

Five expert hiking tips

Always check the weather forecast before setting off

Make sure you have plenty of water

Set off early to avoid sudden weather changes in the afternoon

Wear appropriate clothing and footwear

Take your litter home with you

Tamkeen's offering

Option 1: 70% in year 1, 50% in year 2, 30% in year 3
Option 2: 50% across three years
Option 3: 30% across five years

The National in Davos

We are bringing you the inside story from the World Economic Forum's Annual Meeting in Davos, a gathering of hundreds of world leaders, top executives and billionaires.

More from Rashmee Roshan Lall

US VP candidate Kamala Harris and the complexity of racial identity

Beirut blasts: What do we do with the world's ammonium nitrate?

How the pandemic is testing the solidarity of the European Union

When it comes to peace, is the EU really a great power?

While you're here:

Kareem Shaheen: War in Syria has violated every norm that we believed was sacred

Mina Al-Oraibi: Like Raed Fares, too many have died for their dream of peace in Syria

Hamish de Bretton-Gordon: What it takes to stop the use of chemical weapons

Some of Darwish's last words

"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008

His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.

US tops drug cost charts

The study of 13 essential drugs showed costs in the United States were about 300 per cent higher than the global average, followed by Germany at 126 per cent and 122 per cent in the UAE.

Thailand, Kenya and Malaysia were rated as nations with the lowest costs, about 90 per cent cheaper.

In the case of insulin, diabetic patients in the US paid five and a half times the global average, while in the UAE the costs are about 50 per cent higher than the median price of branded and generic drugs.

Some of the costliest drugs worldwide include Lipitor for high cholesterol.

The study’s price index placed the US at an exorbitant 2,170 per cent higher for Lipitor than the average global price and the UAE at the eighth spot globally with costs 252 per cent higher.

High blood pressure medication Zestril was also more than 2,680 per cent higher in the US and the UAE price was 187 per cent higher than the global price.

Your rights as an employee

The government has taken an increasingly tough line against companies that fail to pay employees on time. Three years ago, the Cabinet passed a decree allowing the government to halt the granting of work permits to companies with wage backlogs.

The new measures passed by the Cabinet in 2016 were an update to the Wage Protection System, which is in place to track whether a company pays its employees on time or not.

If wages are 10 days late, the new measures kick in and the company is alerted it is in breach of labour rules. If wages remain unpaid for a total of 16 days, the authorities can cancel work permits, effectively shutting off operations. Fines of up to Dh5,000 per unpaid employee follow after 60 days.

Despite those measures, late payments remain an issue, particularly in the construction sector. Smaller contractors, such as electrical, plumbing and fit-out businesses, often blame the bigger companies that hire them for wages being late.

The authorities have urged employees to report their companies at the labour ministry or Tawafuq service centres — there are 15 in Abu Dhabi.