Shares of Alphabet, the owner of Google and YouTube, rose after it issued its first dividend and revealed that profits had increased in the latest quarter.
CEO Sundar Pichai hailed the transition to artificial intelligence as a “once-in-a-generation opportunity” as his company races to integrate the technology across its businesses.
Investors cheered the company’s earnings and news of a $70 billion share buyback.
Google recorded $80.5 billion in revenue in the first quarter of 2024, up 15% from the same period last year and reported $1.89 in earnings per share, up from $1.17 – exceeding analysts’ expectations in both aspects.
Actions in alphabet they were up approximately 15% in after-hours trading. The company also announced its first dividend, $0.20 per share, and said the payment would be quarterly.
“Our first quarter results reflect strong performance from Search, YouTube and Cloud. “We are very far into our Gemini era and there is great momentum across the company,” Pichai said in a press release.
Ruth Porat, Alphabet’s chief financial officer, said ad revenue on Google Search, as well as revenue from Google Cloud, drove overall positive growth. YouTube and Google Cloud revenue surpassed Wall Street expectations, and Cloud operating income quadrupled to $900 million. Traffic acquisition costs, one of Alphabet’s main expenses, also increased 10%. Like Google, Meta issued its first dividend in February.
“Alphabet’s better-than-expected quarter was driven by strong search and advertising revenue on YouTube, indicating that uncertainty over how to monetize conversational search and branded media measurement challenges are not yet impacting results. of Alphabet,” said Nikhil Lai, senior research analyst at Forrester.
Internal and external turmoil has rocked Google in recent weeks. The earnings report comes amid employee protests over Google Cloud’s contract with the Israeli government that led to the dismissal of 48 workers. An antitrust decision over its business practices and role in the digital advertising market also looms large. The company failed to launch its new Gemini artificial intelligence tools in February, causing a sharp loss in share value, which the tech giant appears to have escaped.
Long considered a workplace full of high-paying, hard-to-lose jobs, Google fired 1,000 workers in January as it continues to shift its resources to generative artificial intelligence projects. However, Alphabet stock has continued to rise during this period and reached all-time highs this year.
The company’s stock price has continued to rise even as it awaits trial in a landmark antitrust trial that began last year, in which the Justice Department accused Google of illegally monopolizing the Internet search and digital advertising market. . During a trial that lasted several weeks, Google defended its business practices and argued that its search platform was simply a superior product to its competitors. The verdict is expected sometime this year, and it is unclear what punitive measures Google could incur if found guilty.
Google faces a number of other legal challenges, including a $2.3 billion lawsuit from European media companies over its digital advertising practices. The European Commission imposed a $2.7 billion antitrust fine on Google that the company is appealing after a court upheld the penalty in January.
The company’s shares fell earlier this year on investor fears about a haphazard and hasty implementation of its Gemini AI tools, leading to a multi-million dollar liquidation and widespread criticism. Pichai went on the defensive in February after Gemini’s imager created ahistorical images that included people of color as German World War II soldiers, prompting the company to suspend public access to the tool.
In recent weeks, Google has also faced scrutiny and protests over its $1.2 billion contract with the Israeli government to provide cloud computing services. Google fired four dozen workers for protesting the program, and protesters accused Google of being complicit in Israel’s war on Gaza. Employees staged a sit-in at Google’s Sunnyvale offices and New York offices to protest the program. resulting in arrests and the endings.
Pichai addressed the layoffs in an email last week, stating that Google was not the place to “fight over disruptive issues or debate politics.” He also announced that some of Google’s divisions would undergo restructuring. Google announced additional cuts to its workforce around the same time, laying off an unspecified number of people.