Google parent Alphabet (GOOG, GOOGL) reported its fiscal second quarter earnings after the bell on Tuesday, beating analysts' estimates on the top and bottom lines as its cloud businesses continue to pick up steam, topping the $1 billion mark for operating profit for the first time.

For the quarter, the company saw earnings per share of $1.89 on revenue of $84.7 billion. Analysts were anticipating earnings per share of $1.85 on revenue of $84.3 billion, according to data compiled by Bloomberg. That's a jump from the same period last year of 31% and 14%, respectively, when the company reported earnings per share of $1.44 on revenue of $74.6 billion.

Advertising revenue topped $64.6 billion versus analysts' expectations of $64.5 billion, and up from $58.1 billion last year. YouTube ad revenue, however, fell short, with the segment bringing in $8.66 billion versus expectations of $8.95 billion.

Shares of Alphabet were down roughly 3% in premarket trading on Wednesday.

Google saw cloud revenue of $10.35 billion and operating income of $1.17 billion. That's better than analyst expectations of $10.1 billion and operating income of $982.2 million and higher than the $8 billion in revenue and $395 million in operating income the company reported in Q2 2023.

Alphabet shares are up 30% year to date. Shares of rivals Microsoft (MSFT) and Amazon (AMZN) are up 18% and 22% year to date, respectively. All three companies are pouring money into building out their generative AI capabilities, spending lavishly on data centers capable of powering the AI models they offer via their cloud service platforms.

In the second quarter, Alphabet reported spending $2.2 billion building AI models across its DeepMind and Google Research organizations. That's up from $1.1 billion in Q2 2023. When exactly AI starts to generate revenue for Google’s Cloud business, let alone its ad segment, is still up in the air.

“It is still too early to count on AI benefits as most [companies] remain in pilot mode, and material AI [revenue] is more likely a 2025-26 event,” Jefferies analyst Brent Thill wrote in a recent client note ahead of Alphabet's earnings announcement.

Google is still trying to find its footing with AI Overview, the generative AI feature that shows up at the top of Google Search results pages. In May, the company rolled out the search function, only for users to quickly discover that its answers weren’t always accurate, with now-famous responses telling users to put glue in their pizza or to eat a rock every day. Google responded by pulling back some of the generative AI features.