Alphabet Shares Soar on Earnings Win, Dividend News


Google parent Alphabet(NASDAQ:GOOG, NASDAQ:GOOGL)witnessed an impressive 11% surge in morning trading on Friday, following the release of exceptional quarterly results that exceeded both revenue and earnings forecasts. Investors were further buoyed by the revelation of a new cash dividend program of $0.20 per share, alongside the approval of stock repurchases of up to an additional $70 billion by the board of directors.

CEO Sundar Pichai, in a statement on Thursday, attributed the robust first-quarter performance to strong showings from Search, YouTube, and Cloud services. He emphasized the company’s leadership in AI research and infrastructure, expressing confidence in Alphabet’s positioning for the forthcoming wave of AI innovation.

Excluding traffic acquisition costs, revenue surged 16% year-over-year to $67.59 billion, surpassing analyst expectations of $66.07 billion. Similarly, adjusted earnings per share stood at $1.89, outperforming consensus estimates of $1.53.

Despite Google’s historical perception as playing catch-up in the AI domain compared to tech giant Microsoft (NASDAQ:MSFT), executives highlighted Alphabet’s readiness to spearhead the transition towards an AI-centric technological landscape. Pichai underscored the company’s commitment to investments facilitating the development of new AI models, emphasizing potential monetization avenues through advertising, cloud services, and subscriptions.

Integration of AI tools into Google search, enabling users to pose more intricate queries, was also lauded. However, uncertainties lingered regarding AI’s impact on Google’s search business, with potential displacement of traditional search methods and altered user interactions with the web.

Concurrently, investor concerns arose regarding the escalating costs associated with AI investments vis-a-vis returns. Alphabet’s report coincided with Meta’s (NASDAQ:META) acknowledgment of burgeoning expenses, dampening investor sentiment and prompting a more than 10% decline in Meta shares.

Alphabet reported capital expenditures of $12 billion for the quarter, primarily attributed to server and data center investments. CFO Ruth Porat indicated continuity of comparable spending levels in subsequent quarters, reflecting Alphabet’s steadfast confidence in its AI ventures.

Cloud revenue, marking a near 30% surge from the corresponding period, exceeded $9 billion for the second consecutive quarter. Despite Alphabet’s efforts to capture a larger share of the cloud market, it currently trails behind competitors Amazon (NASDAQ:AMZN) and Microsoft(NASDAQ:MSFT).

Google’s core advertising revenue, the cornerstone of its business, witnessed a commendable 13% uptick, reaching $61.66 billion.

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