On Friday, Google parent company Alphabet (GOOG, GOOGL) achieved a market capitalization surpassing $2 trillion, propelled by impressive quarterly results that exceeded revenue and earnings projections, alongside the announcement of a cash dividend program of $0.20 per share.
The board of directors additionally greenlit stock repurchases of up to an additional $70 billion.
CEO Sundar Pichai highlighted the company’s strong performance in Search, YouTube, and Cloud, stating, “Our results in the first quarter reflect strong performance from Search, YouTube and Cloud.”
Pichai underscored Alphabet’s leadership in AI research and infrastructure, along with its global product reach, positioning the company favorably for the next wave of AI innovation.
During early afternoon trading on Friday, Alphabet’s market capitalization stood at $2.15 trillion, with its stock witnessing an approximate 10% increase during the session.
Revenue, excluding traffic acquisition costs, surged 16% from the corresponding period last year to $67.59 billion, outstripping analyst forecasts of $66.07 billion, according to Bloomberg data.
The company reported adjusted earnings per share of $1.89, surpassing consensus estimates of $1.53.
For artificial intelligence (AI), Google has often been perceived as playing catch-up to Microsoft (MSFT), which was among the pioneers in leveraging consumer AI chatbots.
Despite this, Google executives stressed during the earnings call on Thursday that the company is well positioned to lead the transition to an AI-centric tech world, committing to investments fostering the development of new AI models.
Pichai outlined clear strategies for monetizing AI breakthroughs through advertising, cloud services, and subscriptions. He highlighted the integration of AI tools into Google search, enabling users to pose more intricate and detailed queries.
However, the impact of AI on Google’s search business remains uncertain, as new AI-based interfaces could potentially supplant traditional search methods, altering user interactions with the web. Investor apprehensions regarding the costs versus returns associated with AI were also evident.
Alphabet’s report followed a statement by its advertising rival and Big Tech counterpart Meta (META), indicating escalating expenses for the year and the anticipated time lag before AI investments yield substantial revenue. Meta’s comments led to a more than 10% decline in its shares.
Alphabet reported capital expenditures for the quarter amounting to $12 billion, primarily linked to servers and data centers. CFO Ruth Porat affirmed during the call that similar spending levels are expected in the forthcoming quarters, reflecting the company’s confidence in its AI investments.
