Google parent Alphabet (GOOG, GOOGL) surged as much as 13% in after-hours trading Thursday, following standout quarterly results that beat revenue and earnings estimates and a $0.20 per share cash dividend program. The excitement of investors increased with the announcement of
The board of directors also approved stock repurchases of up to an additional $70 billion.
“Our results in the first quarter reflect strong performance in Search, YouTube and Cloud,” CEO Sundar Pichai said in a statement. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI. heresy.”
Revenue, excluding traffic acquisition costs, rose 16 percent from the same period last year to $67.59 billion, beating analysts' expectations of $66.07 billion, according to Bloomberg data. The company reported adjusted earnings of $1.89 per share, compared to the consensus estimate of $1.53.
In artificial intelligence, Google has largely been seen as playing catch-up to Microsoft ( MSFT ), which was the first in the tech world to capture the cultural excitement surrounding consumer AI chatbots. Microsoft invested in OpenAI, the company behind the popular ChatGPT.
But Google executives stressed during Thursday's earnings call that the company is well-positioned to lead change in the AI-driven tech world, and that it is committed to such investments. which will stimulate the development of new models.
Pichai said the company has clear avenues to monetize its AI breakthroughs through advertising, cloud and subscriptions.
He also emphasized the integration of AI tools into Google Search, which allow users to ask more complex and descriptive questions.
But how AI will affect Google's search business is unclear, as new AI-based interfaces could replace traditional search and change the way users interact with the Web.
Investors are also wary of the costs associated with AI versus returns. Alphabet's report comes a day after its ad rival and big tech peer META ( META ) said year-over-year spending was rising and it would take some time for AI investments to generate significant revenue. The comments helped send Meta shares down more than 10 percent.
Alphabet reported capital expenditures for the quarter of $12 billion, mostly related to servers and data centers. CFO Ruth Porat said during the call that the coming quarters will register similar spending, reflecting the company's confidence in its AI investment.
For the second straight quarter, cloud revenue rose nearly 30 percent from the year-ago period to more than $9 billion.
Google is working to claim additional share of the cloud market, where it currently ranks third behind rivals Amazon ( AMZN ) and Microsoft.
Advertising revenue, the core of Google's business, grew 13 percent, registering $61.66 billion.
Hamza Shaban is a Yahoo Finance reporter covering markets and the economy. Follow Hamza on Twitter. @hshaban.
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