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Alphabet's first-quarter sales rose 15%, supported by higher earnings in all its major business lines, and the company announced its first-ever dividend of 20 cents per share along with $70 billion in share buybacks.
Google's parent company's revenue rose to $80.5 billion from $69.8 billion a year earlier, beating analysts' expectations of $79 billion, according to a Thursday filing. Earnings per share were $1.89, up from $1.17 in the year-ago period and beating average estimates of $1.53.
Shares rose 13% in after-hours trading, increasing the company's market capitalization by more than $250 billion, making it worth more than $2 trillion and putting it ahead of “Magnificent Seven” peers Microsoft, Apple and Nvidia. Joined the.
CEO Sundar Pichai said the quarter represented “strong performance in search, YouTube, and cloud,” and Google said, “The Age of Gemini is on track,” referring to its large-scale language models for generative artificial intelligence. “We are progressing towards this,” he said.
“With our leadership in AI research and infrastructure, and global product deployment, we are well-positioned for the next wave of AI innovation,” he added.
The first-quarter dividend was worth about $2.5 billion, and the board said “we intend to pay quarterly cash dividends going forward,'' an increase from Tech, which had previously only made stock buybacks. This is a symbolic policy change for the major companies.
Google and Microsoft's financial and AI investment plans, also reported Thursday, are particularly noteworthy given rival Meta's experience. CEO Mark Zuckerberg says he will spend billions more than planned on AI, saying costs will have to increase significantly “before we can make much money from these new products.” The social media giant's stock plummeted Wednesday after the warning.
Alphabet's capital spending increased to $12 billion in the quarter, above expectations of $10 billion, but its operating margin still widened to 32% from 25% a year earlier, beating expectations for 29%.
Chief Financial Officer Ruth Porat said the move demonstrated “our continued efforts to permanently rebuild our cost base.”
“Relative to the big after-hours price movement, I think the most important thing was that the margins were significantly better than expected,” said Brad Erickson, an analyst at RBC Capital Markets.
“It provides a very good data point regarding management's commitment to realizing cost savings over the next few years,” Ericsson added.
Ad revenue from search and YouTube, which account for more than three-quarters of Google's revenue, rose 13% to $61.7 billion, compared with analyst consensus estimates of $60.2 billion.
Revenue from Google's cloud services business also rose 28% to $9.6 billion as companies seek access to vast computing power and chip infrastructure to train LLM models and ride the AI wave. .
This is a big boost for Pichai. Pichai said that even though the technology was developed in-house by the company's researchers, generative AI is becoming increasingly popular, especially because of Microsoft's $13 billion partnership with OpenAI and the much-hyped ChatGPT. has been criticized for its slow commercialization.
It also helps Google recover from a setback in February when it suspended image generation on Gemini following an uproar over inaccurate historical depictions of various ethnicities and genders.
Google will reveal details of its plans for AI and search at its annual I/O developer conference on May 14th and 15th at its headquarters in Mountain View, California.
