Alphabet shares jump on beat and strong cloud growth

Google shares rose over 5.7% Wednesday, off of a stronger-than-expected earnings report and growth in its cloud computing unit.
Cloud revenue grew 28% year over year and reported operating income for the second quarter in a row.
The company also said finance chief Ruth Porat would step down and assume a new role.

Shares of Alphabet rose nearly 6% Wednesday, driven by stronger-than-expected second-quarter earnings and marked year-over-year growth in cloud computing revenue.

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The company on Tuesday reported adjusted earnings per share of $1.44, more than the $1.34 expected by a Refinitiv survey of analysts. Revenue for the second quarter came in at $74.6 billion, beating a consensus estimate of $72.82 billion.

But it was strong growth in cloud computing that helped drive the stock surge, with the company reporting $8.03 billion in Google Cloud sales, compared to a StreetAccount consensus of $7.87 billion. Google Cloud competes with Amazon Web Services and Microsoft Azure.

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Google's cloud unit reported its second consecutive quarter of operating profit, with second-period income of $395 million, compared to a $590 million loss in the year-ago quarter.

Wall Street analysts cheered the results.

"While questions will remain about AI's impact on core products (e.g. if such a shift can be disruptive over the short-term) or costs structure (e.g. if computing costs per search will rise), we see Alphabet as the leader in compounded AI investment in the past 5-6 years and well positioned to capitalize on this trend in the coming decade," Goldman Sachs analyst Eric Sheridan said.

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The company also announced Wednesday that finance chief Ruth Porat would assume a newly created president and chief investment officer position. Porat will remain in the role until a successor is identified, Google said in a press release.

— CNBC's Jennifer Elias contributed to this report.