Alphabet adds $111 billion in market value after showing progress on AI front in 2nd-quarter earnings

• Alphabet surged as much as 7% on Wednesday, adding about $111 billion to its market valuation.
• The search giant reported second-quarter earnings that beat analyst estimates and talked up its AI developments.
• "This is our seventh year as an AI-first company, and we intuitively know how to incorporate AI into our products," CEO Sundar Pichai said.

Alphabet stock surged as much as 7% on Wednesday, adding $111 billion to its market valuation, after the search giant reported second-quarter earnings that beat analyst estimates.

The company saw its revenue grow 7% to $74.6 billion, while its operating income jumped 12% to $21.8 billion. Operating income in Alphabet's Google Cloud division turned positive, an important milestone for the company. Alphabet's Cloud business has been a distant third place to Amazon's AWS and Microsoft's Azure.

On the earnings call, Alphabet talked up its growing artificial intelligence efforts, which have become a focal point for the company in the eyes of investors, especially following the recent enthusiasm around Microsoft's Copilot initiatives.

"This is our seventh year as an AI-first company, and we intuitively know how to incorporate AI into our products," CEO Sundar Pichai said on the earnings call.

He added that Alphabet has incorporated AI capabilities into its search engine products, and its Bard chatbot is getting faster and smarter.

To take advantage of the AI opportunity, Alphabet said it is "sharpening [its] focus" and is moving people at the company to work on high-priority initiatives.

Alphabet also announced that its long-time CFO, Ruth Porat, would transition into a new role as president and chief investment officer.

Wall Street cheered Alphabet's earnings report, with Bank of America arguing that fears that generative AI would eat Google's lunch are unfounded.

"AI concerns not visible in results," Bank of America said, adding that Alphabet's earnings compared favorably to Microsoft's report.

"In our view, the quarter helped address relative revenue growth concerns vs. peers with accelerating Search and YouTube growth, and had ad results/commentary supporting our thesis that Alphabet will be a net beneficiary of AI," BofA said.

Alphabet is now worth $1.67 trillion, making it the third largest company in the US, behind Microsoft and Apple.