After shelling out hundreds of millions of dollars to shrink its vast real estate portfolio, Google's parent appears ready to slow its widespread office reduction plan in a sign that could lead other tech giants to once again invest in expansions.

Mountain View, California-based Alphabet spent far less on real estate-related impairment charges in the second quarter compared to the first three months of 2023, indicating that downsizing efforts may be in the rear-view mirror as it now focuses on more profitable growth in the face of ongoing economic concerns. The company paid $69 million through the quarter ending June 30 for expenses stemming from terminating deals and offloading some of its offices around the world. That's significantly lower than the roughly $565 million it paid for the first three months of the year.

Combined with costs associated with laying off about 12,000 positions earlier this year — the largest layoffs in the company's history — Alphabet has paid more than $2.5 billion since the beginning of the year as part of a strategy to pull back on expenses as it battles slowing revenue growth, renews its emphasis on profitability, and walks back some growth decisions it made in response to pandemic-related trends that have since fizzled.

Google was able to turn around its recent streak of declining revenue growth, another indicator that the improved advertising market and economic outlook could justify increased capital expenditure plans. The Silicon Valley company reported more than $75 billion in revenue for the second quarter, up 7% from a year earlier. Operating income also rose, climbing 12% to roughly $22 billion.

While the company will continue to look for ways to cut expenses and reallocate capital to higher-priority investments, Alphabet CEO Sundar Pichai told analysts there is momentum across the country that will require ongoing investments — especially for its accelerating artificial intelligence business.

"To take advantage of the AI opportunities ahead, we have been sharpening our focus as a company and investing responsibly with great discipline to find areas where we can operate more cost effectively," Pichai said on the tech giant's earnings call Tuesday. "We continue to slow our expense growth and pace of hiring, and are actively moving people to higher-priority activities within the company while we continue to optimize our real estate footprint for current and future needs."

Google has long been at the forefront of trends that have rippled across the global office market, largely as a leader for offering perks and amenities to attract and retain talent. In recent months, however, it has been among some of the world's largest tech companies that were caught by surprise by pandemic-related growth, hired aggressively and are now walking back investments they had made that no longer line up with their headcounts or real estate needs.

Companies quickly shifted their focus from a growth-at-any-cost mentality to one that prioritized profits. Restructuring efforts made by companies such as Meta, Amazon, Salesforce, Uber and Twitter have dealt major blows to office markets from San Francisco to New York, resulting in bursts of large sublease availabilities and vacancies that have made it harder for cities to regain some of their pre-COVID momentum.

As the macroeconomic outlook improves, however, the worst of the real estate offloading efforts appears to be turning around.

"We remain very focused on durably engineering our cost base, and the most evident to date have been actions we have taken to reduce the pace of our headcount growth," Alphabet Chief Financial Officer Ruth Porat told analysts. She added that the company's capital expenditure expenses were lower at the beginning of the year as it continued "to moderate the pace of fit outs and ground-up construction to reflect the slower pace of headcount growth."

Now, Porat said Alphabet is planning to increase its investments in data center construction as it races to fuel growth in its AI plans.

"We expect elevated levels of investment in our technical infrastructure increasing in the back half of 2023 and continuing to grow in 2024, and the primary driver is to support AI growth and data center capacity," she said. "We are setting the company up well to be able to invest for long-term growth, and we'll continue to execute on those."

Alphabet was among the tech firms that raked in record profits during the pandemic, feeding significant spikes in hiring, and leasing and acquisition activity, in anticipation of the gradual return of its workforce to the office.

The company's global workforce now includes just shy of 181,800 people, a figure that reflects the majority of the company's recent layoffs. It employed about 140,000 people at year-end 2021.