Alphabet gets a boost as Google Cloud becomes profitable

26 Apr 2023

Image: © Tada Images/

Google Cloud became profitable for the first time and Search had a resilient quarter, but YouTube remains in an ad revenue slump.

Google parent company Alphabet has managed to get a slight revenue growth for the start of 2023, with some divisions seeing significant gains while others continue to wane.

The tech giant reported revenue of $69.78bn for the first quarter of the year, a 3pc increase compared to the same period last year. This marks a slight improvement to the crawling growth of 1pc the company reported at the end of 2022.

Alphabet’s net income dropped by 8pc to $15.05bn, nearly $1.4bn less than the same period in 2022. However, the company said it had $2.6bn in charges due to “reductions in our workforce and office space”.

At the start of the year, the tech giant revealed plans to cut 12,000 jobs worldwide, joining many companies in the tech sector letting staff go to improve their efficiency.

Cloud rises high

The biggest boost for Alphabet was growth in its Google Cloud division, which saw a profitable quarter for the first time. This division’s revenue reached $7.45bn, up from $5.82bn last year, while its net income reached $191m.

Google Search remained stable, making $40.35bn in revenue compared to $39.61bn last year. Google Advertising saw a slight drop for the second consecutive quarter, reflecting the ongoing crunch in the global ad market.

Alphabet and Google CEO Sundar Pichai said the company is “pleased with overall business performance, with “Search performing well and momentum in Cloud.

“We introduced important product updates anchored in deep computer science and AI,” Pichai said. “Our North Star is providing the most helpful answers for our users and we see huge opportunities ahead, continuing our long track record of innovation.”

The company has been in an AI race with Microsoft, with its own generative AI Bard being created to take on the dominance of ChatGPT.

While Alphabet has held steady in several divisions, others continued to wane this quarter. YouTube saw another drop in its advertising revenue, falling for the third consecutive quarter.

Meanwhile, Alphabet’s Other Bets division faced significant losses this quarter, with its revenue dropping to $288m and losses up by 47pc, reaching $1.2bn. This division includes various start-up ventures such as Verily, Instrinsic, Waymo, Calico and CapitalG.

Last November, an activist hedge fund urged Google parent company Alphabet to make the company more efficient with job cuts.

This hedge fund also urged Alphabet to reduce the annual losses in Other Bets by 50pc. In January, Alphabet announced significant job cuts to both Verily and Intrinsic.

10 things you need to know direct to your inbox every weekday. Sign up for the Daily Brief, Silicon Republic’s digest of essential sci-tech news.

Leigh Mc Gowran is a journalist with Silicon Republic