Alphabet ( GOOGL ) reported first-quarter earnings and earnings that handily beat consensus estimates, while the Internet giant announced its first-ever dividend and a new $70 billion share buyback. Google shares soared as Alphabet’s cloud computing and YouTube units beat estimates as well as its core digital advertising business.
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“We continue to believe that Google is at the beginning of a major new secular growth cycle driven by generative artificial intelligence innovations in the consumer, advertiser and enterprise space,” Evercore ISI analyst Mark Mahaney said in a report.
Google said its first quarterly dividend will be 20 cents. It joins Facebook parent Meta platforms (META) as a new dividend payer among tech giants.
Apple (AAPL), Microsoft (MSFT) and Nvidia (NVDA) also pays dividends, although the companies have not increased dividends much.
Google has not provided an update on its search for a new CFO.
Reported after the market closed on Thursday, Google’s earnings came in at $1.89 per share, up 61% from a year earlier. Further, gross revenue increased by 15% to $80.54 billion.
Analysts had forecast Google earnings of $1.51 per share on revenue of $78.7 billion.
The tech giant reports earnings under generally accepted accounting principles, also known as GAAP.
Google Stock: Cloud, YouTube Results Beat
Additionally, ad revenue rose 13% to $61.66 billion, topping estimates of $60.44 billion.
Meanwhile, YouTube’s ad revenue rose 21% to $8.1 billion, beating estimates of $7.7 billion. “On the viewer side, YouTube surpassed 100 million music and premium subscribers, contributing to strong ad revenue growth within the segment,” William Blair analyst Ralph Schackart said in a report. “In addition, YouTube TV has more than 8 million paid subscribers.”
Google said cloud-computing revenue rose 28% to $9.574 billion, above estimates of $9.4 billion.
GOOGL stock has a Composite Rating of 97 out of the best possible 99, according to IBD Stock Checkup.
In the stock market today, GOOGL stock rose more than 13% to 176.65 in extended trading.
“Perhaps most important to the big after-hours move in the stock was that margins came in significantly above expectations — 350 basis points above consensus, allowing for a 25% EPS beat,” RBC Capital analyst Brad Erikson said in a report.
Additionally, Alphabet also announced a new $70 billion Google stock buyback.
Capital expenditure jumps on AI investments
Heading into Google’s earnings report, the Internet major had risen 11% in 2024. Shares rose in March on reports of a pending artificial intelligence-related deal with Apple (AAPL).
But Google shares retreated in Thursday’s regular session amid concerns over soaring capital spending as tech giants compete in generative artificial intelligence.
In Q1, Google’s capital spending rose to $12 billion, up from $11 billion in the December quarter and $6.3 billion in the same period last year. Jefferies analyst Brent Thill expects Google’s investment in 2024 to jump 54%.
Google is among the AI ​​stocks to watch.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cyber security and cloud computing.
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