Alphabet (GOOGL) reported first-quarter earnings and revenue that handily beat consensus estimates while the internet giant announced its first-ever dividend and a new $70 billion stock buyback.
Google stock soared as Alphabet’s cloud computing and YouTube units beat estimates as well as its core digital advertising business.
Reported after the market close on Thursday, Google earnings came in at $1.89 per share, up 61% from a year earlier.
Analysts had predicted Google earnings of $1.51 per share on revenue of $78.7 billion.
Google Stock: Cloud, YouTube Results Beat Additionally, advertising revenue rose 13% to $61.66 billion, topping estimates of $60.44 billion.
Further, Alphabet also announced a new $70 billion Google stock buyback.
Capital Spending Jumps On AI Investments Heading into the Google earnings report, the big-cap internet stock had advanced 11% in 2024.
But Google stock retreated in Thursday’s regular session on worries over capital spending soaring as tech giants compete in generative AI.
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“In a report, Evercore ISI analyst Mark Mahaney stated, ‘We continue to believe that Google is at the beginning of a major new secular growth cycle powered by generative artificial intelligence innovations in the consumer, advertiser, and enterprise space.
Twenty cents will be Google’s first quarterly dividend, the company announced. It now joins Facebook parent company Meta Platforms (META) as a tech giant dividend payer.
Although the dividends have not been raised significantly, Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA) all pay dividends.
Concerning its search for a new chief financial officer, Google did not provide any information.
Google’s earnings were revealed on Thursday following the market close. They were $1.01 per share, up 61 percent from the previous year. Additionally, gross revenue increased by 15% to $801,54 billion.
Analysts had predicted Google earnings of $1.51 per share on revenue of $78.7 billion.
The widely recognized accounting principles, or GAAP, are used by the tech giant to report earnings.
Google Stock: YouTube Results Beat Cloud.
When this was going on, YouTube’s ad revenue surpassed estimates by 21% to reach $8.11 billion. According to Ralph Schackart, an analyst at William Blair, “On the viewership side, YouTube surpassed 100 million music and premium subscribers, contributing to strong ad revenue growth within the segment” in a report. Additionally, there are over 8 million paying subscribers to YouTube TV. “.
Surpassing estimates of $9.4 billion, Google reported a 28% increase in cloud computing revenue to $9.574 billion.
Based on a best-possible score of 99, GOOGL stock has an IBD Stock Checkup Composite Rating of 97.
GOOGL’s stock increased by over 13 percent in extended trading on the stock market today, reaching 176 point 65.
In a report, RBC Capital analyst Brad Erikson stated, “Perhaps the most significant factor contributing to the significant after-hours movement in the stock was that margins exceeded expectations by 350 basis points, allowing for a 25 percent EPS beat.”.
Alphabet also revealed plans to repurchase $70 billion worth of Google stock.
Investments in AI See An Increase In Capital Spending.
The large-cap internet stock had increased 11% in 2024 before Google’s earnings release. Following rumors of a potential AI agreement with Apple (AAPL), shares increased in March.
However, concerns about capital spending skyrocketing as tech giants compete in generative AI caused Google stock to decline during Thursday’s regular session.
After spending $11 billion in the December quarter and $6.33 billion in the same period last year, Google increased its capital expenditures to $12 billion in Q1. Brent Thill, an analyst at Jefferies, projects a 54% increase in Google’s capital expenditures by 2024.
Google is one AI stock to keep an eye on.
Updates on cloud computing, cybersecurity, and artificial intelligence can be obtained by following Reinhardt Krause on Twitter at @reinhardtk_tech.
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