Alphabet's Q1 earnings surpass market predictions; shares jump 14%
Alphabet Inc., the parent company of Google, has reported first-quarter earnings that surpassed market predictions. The firm's sales, excluding partner payouts, reached $67.6 billion for the quarter ending March 31, outperforming market analysts' average forecast of $66.1 billion. The net income per share stood at $1.89, exceeding Wall Street's prediction of $1.53. Alphabet declared a dividend payout of 20 cents per share and announced an additional stock buyback worth $70 billion. This led to a 14% surge in company's shares.
Alphabet has been investing heavily in AI
Alphabet has been investing heavily in artificial intelligence (AI) development, a strategy that has boosted demand for its cloud services. The company reported a 28% increase in revenue from its cloud services in the first quarter. Despite trailing behind Amazon and Microsoft in the cloud computing race, Google's expertise in AI could potentially bridge this gap.
Role of AI in boosting cloud services
Alphabet's Chief Financial Officer, Ruth Porat, emphasized the role of AI in boosting the company's cloud services. "The main thing is, we are really excited about the benefit from AI for our cloud customers," Porat stated during a press call. She noted an increasing contribution from their AI solutions and said that Google Cloud's performance "really reflect broad strength across the industry."
Digital advertising operations continue to drive growth
Google reported a Q1 capital expenditure of $12 billion, primarily invested in technical infrastructure such as servers and data centers. Porat anticipates the quarterly capex to remain at or above this level throughout the year. Despite increased competition, Google's robust digital advertising operations continue to drive growth, with Search advertising revenue climbing 14% to $46.2 billion.
Google Cloud, YouTube post strong sales
Google Cloud reported sales of $9.6 billion and a profit of $900 million, significantly surpassing analysts' estimates of $672.4 million. Additionally, YouTube posted revenue of $8.1 billion, exceeding analysts' average estimate of $7.7 billion and marking its highest growth rate in two years.
