Google parent Alphabet (GOOG, GOOGL) rose as much as 13% in afternoon trading Thursday after reporting stellar quarterly results that beat revenue and earnings estimates and investors with the announcement of a cash dividend program of $0.20 per share. Encouraged.
The board of directors also approved stock repurchases of up to an additional $70 billion.
“Our first quarter results reflect strong performance from 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.” innovation.”
Revenue, excluding traffic acquisition costs, rose 16% 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 been widely seen as competing with Microsoft (MSFT), which was one of the first in the tech world to gain cultural excitement around consumer AI chatbots. Microsoft invested in OpenAI, the company behind the popular ChatGPT.
But Google executives stressed during an earnings call Thursday that the company is well-positioned to lead the transition to an AI-focused tech world, and that it’s committed to investments that fuel the development of new models. Will give.
Pichai said the company has clear paths to monetizing AI breakthroughs through advertising, cloud and subscriptions.
He also advocated the integration of AI tools into Google Search, which allows users to ask more complex and descriptive questions.
But how AI will impact Google’s search business is unclear, as new AI-based interfaces could displace 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 advertising rival and Big Tech peer Meta (META) noted that year’s expenses are rising and it will take some time to generate significant revenue from AI investments. The comments helped send Meta shares falling more than 10%.
Alphabet reported capital expenditures of $12 billion for the quarter, mostly related to servers and data centers. CFO Ruth Porat said during the call that similar levels of spending will be recorded in coming quarters, reflecting confidence in the company’s AI investments.
Cloud revenue increased nearly 30% from the year-ago period to more than $9 billion for the second consecutive quarter.
Google is working to claim additional share in the cloud market, where it currently ranks third behind rivals Amazon (AMZN) and Microsoft.
Advertising revenue, which is the core of Google’s business, rose 13% to $61.66 billion.
Hamza Shaban is a reporter covering markets and economics for Yahoo Finance. Follow Hamza on Twitter @hashban,
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