"Most of the top 100 customers are already using generative AI solutions."

According to corporate intelligence expert CaiJingTuYa, Alphabet (GOOG.US), the parent company of Google, announced its Q2 2024 earnings early in the morning of July 24, Beijing time.

During the quarter, the company's total revenue was $84.7 billion, a year-on-year increase of 14%. Among them, Google Services revenue was $73.7 billion, up 12% year-on-year. Search and other businesses grew by 14%, primarily driven by growth in the retail vertical; YouTube's advertising revenue increased by 13%, primarily due to direct brand growth and network effects. Subscription platform device revenue increased by 14% year-on-year, mainly fueled by strong growth in YouTube subscriptions.

"We are very pleased with YouTube's growth this quarter, and we expect to further capture advertising growth opportunities in the third quarter, particularly from retailers in the Asia-Pacific region," said Alphabet CFO Ruth during the conference call.

When asked if current investments in AI were overheating, Alphabet CEO Sundar Pichai stated that they are still in the early stages of AI investment and development. "Many times, even if we find out later that we may have overinvested, these infrastructures have a broad usage base for us. They have a long experimental lifespan and can be applied across industries. And if you don't invest, that's definitely wrong because more problems will arise later due to insufficient capacity."

Regarding cloud business, Ruth mentioned that Q2 saw a breakthrough, with quarterly revenue reaching $10 billion and operating profit exceeding $1 billion. "We are very pleased to see that most of the top 100 customers are already using our generative AI solutions," said Sundar, further adding that the cloud business has improved its profit margins and will continue to increase investments in the future.

However, this conference call did not mention a recent "episode" in its cloud business—on July 14, local time, Alphabet, Google's parent company, had initiated negotiations to acquire cybersecurity startup Wiz.

But recent news indicates that the acquisition talks have fallen through, and Wiz may seek an independent IPO.

Founded in 2020, Wiz has rapidly become one of the hottest companies in cloud security, backed by prominent Silicon Valley venture capital firms such as Sequoia Capital, Andreessen Horowitz, Index Ventures, and Lightspeed Venture Partners. Earlier this year, the company raised $1 billion at a valuation of $12 billion. Currently, it has an annual compound revenue of approximately $500 million and plans to achieve a 100% annual compound growth rate within the next year.

Originally, Google planned to acquire Wiz for $23 billion to enhance its competitiveness in the cloud computing space and bridge the gap with competitors Amazon and Microsoft. Two years ago, Google acquired another cybersecurity company, Mandiant, for $5.4 billion. If successful, this acquisition would have been Google's largest deal since it acquired Motorola Mobility for $12.5 billion in 2012.

However, in an email sent to employees on Monday, Wiz CEO Assaf Rappaport indicated that the company is now pursuing an initial public offering (IPO). "I know there have been rumors about a potential acquisition in the past week. While we have received many offers, we have chosen to continue building Wiz." He also stated that the company plans to achieve a 100% annual compound growth rate before the IPO.

From the information conveyed in the email, it appears that both parties did not reach an agreement on the acquisition.

Some analysts suggest that in addition to differing opinions, "the deal with Wiz could have triggered antitrust scrutiny against Google," which may also be one of the reasons for the breakdown of negotiations. Currently, Google is awaiting a ruling in a lawsuit alleging "unlawful means to maintain dominance in its online search business." Last year, federal agencies filed a second antitrust lawsuit against Google's advertising technology business that has yet to go to trial.

However, some market observers believe that mergers of this scale are always difficult to predict, and "the two companies may still return to the negotiating table."