Mountain View, California – Alphabet Inc.’s market capitalization exceeded $2 trillion on Friday following strong quarterly results that surpassed revenue and earnings expectations. The company, known for its Google search engine, also announced a cash dividend program of $0.20 per share and approved stock repurchases of up to $70 billion.
According to CEO Sundar Pichai, the first quarter saw robust performance from key areas like Search, YouTube, and Cloud that position the company for the next wave of artificial intelligence (AI) innovation. The company’s market cap reached $2.15 trillion in early afternoon trading on Friday, with its stock increasing approximately 10% during the session.
Alphabet reported revenue of $67.59 billion, a 16% increase from the same period last year, outshining analyst estimates of $66.07 billion. Adjusted earnings per share were reported at $1.89, exceeding consensus estimates of $1.53.
Despite perceptions that Google has been trailing behind in AI compared to tech giant Microsoft, Alphabet executives expressed confidence that the company is well-equipped to lead the shift to an AI-centric tech landscape. Google’s investments in AI aim to drive the development of new models and offer monetization opportunities in advertising, cloud services, and subscriptions.
The integration of AI tools into Google search allows for more sophisticated and descriptive user interactions. However, the impact of AI on Google’s search business remains uncertain, as new AI-based interfaces could potentially reshape traditional search methods and user engagement with the internet.
Investors are cautious about the costs associated with AI investments and their potential return. Alphabet’s capital expenditures for the quarter totaled $12 billion, primarily allocated to servers and data centers. CFO Ruth Porat indicated that the company’s continued high levels of spending reflect confidence in its AI endeavors.
Alphabet’s cloud revenue rose nearly 30% from the previous year to surpass $9 billion for the second consecutive quarter. Despite efforts to increase its market share in the cloud industry, Google currently ranks third behind Amazon and Microsoft.
The company’s advertising revenue, a core aspect of its business, experienced a 13% increase amounting to $61.66 billion. The positive financial results and strategic investments underscore Alphabet’s commitment to AI innovation and its future growth prospects.