Alphabet reported strong first-quarter results, exceeding Wall Street’s expectations for sales, operating margin, and profits. The company’s total revenue rose 15.4% year over year to $80.54 billion, while earnings per share surged 62% to $1.89. Alphabet’s Google Search and YouTube platforms are valuable tools for advertisers, and the company is a leader in artificial intelligence research. The stock buyback program was reloaded and a quarterly dividend was initiated for the first time. Alphabet’s big three focus areas – Search, YouTube, and Google Cloud – all performed better than expected, leading to strong company-wide sales and profitability.
Alphabet’s stock price surged nearly 12% in extended trading following the strong earnings report. The company’s operating margin of 31.6% was particularly impressive, driven by lower costs and strong revenues in its core businesses. The company’s Google Services segment, Google Cloud, and Other Bets unit all performed well. Management initiated a quarterly cash dividend and authorized an additional $70 billion share repurchase program. CEO Sundar Pichai highlighted the success of YouTube and Google Cloud, projecting combined annual revenue to exceed $100 billion.
Alphabet’s search revenues were led by advertisers in the retail industry, while YouTube saw strength in both direct response and brand advertising. The monetization of YouTube Shorts and subscription offerings is also improving. Google Cloud’s growth of 28% was driven by an increasing contribution from AI technology. Despite slightly lower than expected operating cash flow, Alphabet remains well-positioned with a high cash balance and strong earnings supported by cash. The company’s capital expenditures were driven by investments in technical infrastructure, including AI servers and data centers.
In the first quarter, Alphabet returned nearly $14.6 billion to shareholders through buybacks and stock-based compensation. The company has a significant cash and marketable securities balance of $108 billion, which supports its investments in future growth initiatives. The first-ever dividend will be paid in June, with a yield of 0.51%. Overall, Alphabet’s strong first-quarter performance and dividend announcement demonstrate the company’s commitment to returning value to shareholders while continuing to invest in innovation and growth.
