Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) reported second-quarter earnings results on Tuesday, and while the tech giant met analyst estimates and expectations, it fell short on YouTube advertising revenue.

What Happened: During the earnings call, Michael Nathanson from Moffett questioned the faster growth of Google Search compared to YouTube. In the second quarter, YouTube's year-on-year revenue growth experienced a deceleration compared to the first quarter.

In response, Alphabet's CFO, Ruth Porat, expressed satisfaction with YouTube's performance. She attributed the slowdown to a challenging comparison with the first quarter of the last year when YouTube was rebounding from a period of negative year-on-year growth.

"We're really pleased with YouTube, the YouTube team, all that was done. It was driven by the brand followed by direct response. And they have very strong ongoing operating metrics," she stated.

Porat also said that YouTube's revenue growth in the second quarter faced several headwinds compared to the first quarter. Foreign exchange fluctuations also impacted results, she said.

Alphabet CEO Sundar Pichai also chimed in, discussing the ongoing development of multimodal models and their future relevance to YouTube.

"In terms of getting real generative audio, video experience is working well. I think there is still — it's going to take some time. But over time, obviously, it will be deeply relevant to YouTube. And so, it's an area I'm excited about in the future," he said.

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Why It Matters: Despite not meeting estimates, YouTube's ad revenue still grew, reaching $8.66 billion, up from $7.66 billion in the same quarter last year.

Alphabet's second-quarter revenue was $84.742 billion, surpassing the consensus estimate of $84.202 billion. The tech giant's quarterly earnings of $1.89 per share also beat analyst estimates of $1.85 per share.

This marks the sixth consecutive quarter that Alphabet has outperformed analyst estimates on both the top and bottom lines, according to data from Benzinga Pro.

Price Action: As of the latest update, Alphabet's Class A shares declined by 2.19% in after-hours trading, settling at $177.80, while the Class C shares fell by 2.18%, reaching $179.59.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.