Google parent Alphabet’s stock price surged more than 12% after its blockbuster earnings report, pushing the company’s market capitalization to about $2.2 trillion, setting it up for its first-ever $2 trillion valuation. The company’s first-quarter earnings report was well above expectations, with $80.5 billion in revenue and $1.89 earnings per share, leading to its best-ever quarterly profit. Alphabet is now on track to join the likes of Microsoft, Apple, and Nvidia as the only other companies valued at over $2 trillion.
Alphabet’s earnings expansion was surprising given that the company actually trimmed its headcount from 191,000 to 181,000 last quarter. The company also announced its first-ever cash dividend, indicating its maturity as a company and rewarding shareholders with a modest 0.5% dividend yield. Despite setbacks with its Gemini generative artificial intelligence program, Alphabet’s stock has been performing well, hitting a new all-time high earlier this month as it flirts with a $2 trillion valuation for the first time.
The final quarter of 2023 was Alphabet’s best quarter ever in terms of profits and sales, with Google’s revenue moderating in the opening stretch of 2024. Despite this moderation, Google’s fourth quarter has consistently been its highest-grossing quarter during its 20 years as a public company. With advertising at its core, Alphabet relies on ads for more than 75% of its revenues, a smaller percentage than its competitor Meta, which relies on ads for about 99% of its total sales.
Alphabet’s success in the first quarter of 2024 comes as a surprise, given the challenges the company faced earlier in the year with its Gemini program. Despite shedding $90 billion in market value on one day after pulling Gemini’s image-generating service offline, Google has maintained its dominance in online search market share. CEO Sundar Pichai sees 2024 as the early days of “the Gemini era,” indicating that the company is optimistic about the future despite these setbacks.
Overall, Alphabet’s stock price surge and strong earnings report demonstrate the company’s resilience and ability to adapt to challenges. With a market capitalization of $2.2 trillion, the company is poised to achieve a historic milestone with its first-ever $2 trillion valuation. As one of the few companies in the world valued at over $2 trillion, Alphabet’s success in the first quarter of 2024 cements its position as a leader in the tech industry and a force to be reckoned with in the future.
