Google shares rallied Friday, after the search giant beat both earnings and revenue expectations for the quarter, easing worries about its mounting expenses.
Google's shares soared more than 13%, after leaping in after-hours trading when the search engine and advertising company said its earnings excluding items shot up to $8.74 a share from $6.45 a year earlier.
Net revenue, which excludes fees paid to partner websites, jumped 36 percent to $6.92 billion.
Analysts expected Google to earn $7.85 a share on revenue of $6.55 billion, according to Thomson Reuters.
Analysts said the company benefited from growth in several of its businesses including mobile and online video.
"Google should be viewed as a growth company again this quarter," said Stifel Nicolaus analyst Jordan Rohan. "The combination of mobile search, Android, ad exchange, YouTube, and the core search businesses, they're all doing well. Google is no longer a one-trick pony.''
"The number to focus on is really the GAAP earnings number. Google spent aggressively, hiring just as many people this quarter as they did last quarter.''
Net income increased 36 percent to $2.51 billion, or $7.68 a share.
Investors had feared Google's ever-increasing spending would eat into margins. Operating expenses leapt 49 percent to $2.97 billion in the second quarter, to about a third of revenue.
But analysts said the big increase in sales more than compensated for the rise in costs.
"Revenue growth overrides the hiring and the expense issues," BGC Partners analyst Colin Gillis said in response to the share price jump.
"Nice quarter from the guys, but you still have a situation of declining margins,'' he said.
Before the earnings, some analysts had argued that the launch of Google+, its biggest foray so far into the hot field of social networking, may take some of the heat off the company for its spending and make Wall Street more comfortable with co-founder Page, who took the CEO reins in April.
Investors are hungry also for details about an investigation by the U.S. Federal Trade Commission into Google's business practices, as well as any commentary about how the European debt crisis is affecting its advertising business.
Google shares have a had a rocky week after a downgrade by Morgan Stanley, which cut its price target on the stock to $600 from $645. The stock also fell during regular trading Thursday, down more than 2 percent, but rebounded more than 10 percent in after-hours trading after the report. Click here for the latest quotes for Google.