Alphabet’s stock surged in after-hours trading on Thursday following the release of its earnings report, which exceeded analysts’ expectations, showcased significant growth in its cloud division profits and marked the company’s debut of a dividend.
The post-market surge pushed Alphabet’s market capitalization beyond $2 trillion.
Key highlights from the report include:
- Earnings per share: $1.89, surpassing the $1.51 expected by LSEG
- Revenue: $80.54 billion, beating the anticipated $78.59 billion by LSEG
Additionally, Wall Street closely monitored other metrics:
- YouTube advertising revenue: $8.09 billion, exceeding the expected $7.72 billion
- Google Cloud revenue: $9.57 billion, higher than the projected $9.35 billion
- Traffic acquisition costs (TAC): $12.95 billion, slightly above the estimated $12.74 billion
Alphabet reported a 15% revenue increase from the previous year, reaching $69.79 billion, marking the fastest growth rate since early 2022.
The company’s board approved a cash dividend of 20 cents per share, payable on June 17 to shareholders of record as of June 10, signaling its intention to continue distributing quarterly cash dividends in the future.
Alphabet also announced its authorization to repurchase an additional $70 billion in shares, aiming to act in the best interest of the company and its stockholders. Ending the quarter with $108 billion in cash, equivalents, and marketable securities, slightly lower than the $110.9 billion recorded a year earlier.
Net income surged by 57% to $23.66 billion, or $1.89 per share, compared to $15.05 billion, or $1.17 per share, in the previous year.
Furthermore, Alphabet surpassed expectations in YouTube advertising revenue and cloud revenue. Its total ad sales reached $61.66 billion, up from $54.55 billion a year ago, indicating a resurgence in Google’s core advertising business following challenging economic conditions in 2022 and 2023.
Operating income in Google’s cloud business quadrupled to $900 million, showcasing substantial profits after years of investment to compete with Amazon Web Services and Microsoft Azure.
Alphabet’s strategic investments in artificial intelligence have strengthened its position in the market, with CEO Sundar Pichai noting,
“Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation,” in the earnings release.
