Google parent Alphabet (GOOG, GOOGL) gained as much as 13% after hours Thursday, following notable quarterly results that beat revenue and profit estimates and sparked excitement investors with the announcement of a cash dividend program of $0.20 per share.
The board also approved stock repurchases worth an additional $70 billion.
“Our first quarter results reflect strong performance in search, YouTube and cloud,” CEO Sundar Pichai said in a statement. “Our leadership in AI research and infrastructure, along with our global product footprint, positions us well for the next wave of AI innovation.”
Revenue, excluding traffic acquisition costs, increased 16% from the same period last year to $67.59 billion, beating analysts’ expectations of $66.07 billion. dollars, according to Bloomberg data. The company reported adjusted earnings per share of $1.89, compared to the consensus estimate of $1.53.
In the artificial intelligence space, Google is widely seen as playing catch-up to Microsoft (MSFT), which was among the first in the tech world to reap the cultural enthusiasm around consumer AI chatbots. Microsoft has invested in OpenAI, the company behind the popular ChatGPT.
But Google executives stressed during Thursday’s earnings conference call that the company is well-positioned to lead the transition to an AI-centric technology world and is committing to investments that will fuel development. new models.
Pichai said the company has clear ways to monetize advances in AI through advertising, cloud and subscriptions.
He also touted the integration of AI tools into Google Search, which allow users to ask more complex and descriptive questions.
But it remains unclear how AI will influence Google’s search activities, as new AI-powered interfaces could replace traditional search and change the way users interact with the web.
Investors are also wary of the costs associated with AI relative to returns. Alphabet’s report came a day after its advertising rival and Big Tech peer Meta (META) noted that spending for the year was increasing and that it would be some time before investments in the AI generates significant revenue. The comments helped send Meta shares down more than 10%.
Alphabet reported $12 billion in capital spending for the quarter, primarily related to servers and data centers. Chief Financial Officer Ruth Porat said on the call that future quarters will see similar spending levels, reflecting the company’s confidence in its AI investments.
For the second consecutive quarter, cloud revenue increased nearly 30% from the year-ago period to exceed $9 billion.
Google is working to claim additional share of the cloud market, where it currently sits in third place behind rivals Amazon (AMZN) and Microsoft.
Advertising revenue, Google’s core business, increased 13%, reaching $61.66 billion.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.
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