Alphabet reported revenue of $80.5 billion for Q1, a 15 percent increase fueled largely by online advertising from Google Search and YouTube. The figure topped analyst estimates of $78.8 billion. Profit soared, rising 57 percent to more than $23.6 billion, wildly overperforming the forecast of $18.9 billion. The strong performance resulted in Alphabet announcing its first ever shareholder dividend, at 20 cents per share, which pays out on June 17. Alphabet’s board approved a $70 billion stock repurchase program, and the news-filled earnings event drove Alphabet shares up 13 percent in after-hours trading.

The results followed “months of scrutiny over an expensive push in artificial intelligence,” according to The Wall Street Journal, explaining that “Big Tech companies such as Google and Microsoft — which also reported Thursday better-than-expected quarterly sales growth — are pouring money into building new data centers and chips for artificial intelligence.”

Alphabet’s capital expenditures totaled $12 billion for the quarter, a 91 percent jump over the same period in 2023.

“We are well under way with our Gemini era and there’s great momentum across the company,” Google CEO Sundar Pichai said in the earnings release, referencing the company’s flagship AI model and lauding the performance of “Search, YouTube and Cloud.” Advertising was up 13 percent from a year ago, hitting $61.7 billion. Google Cloud sales climbed nearly 29 percent to $9.6 billion.

“Profits were helped by ongoing cost cuts,” WSJ points out, noting that leadership “slashed additional jobs this month in the real-estate and finance divisions, adding to a series of cuts that Pichai said would continue through this year.” Layoffs in the core engineering division were also reported along with earnings, affecting some 200 employees, WSJ says.

“We continue to manage our headcount growth and align teams with our highest priority areas,” Pichai said. “This speeds up decision making, reduces layers and enables us to invest in the right areas.”

“It took Google more than 15 years to reach $100 billion in annual revenue,” yet the last six years have seen Alphabet go from $100 billion to more than $300 billion in annual revenue, Pichai said in prepared remarks that were part of the earnings call. He emphasized a “track record of investing in and building successful, new, growing businesses.”

“In the last year, Google has incorporated AI into nearly every facet of its product portfolio — answering some user questions in the search engine, helping content creators make videos on YouTube and suggesting ways to start drafting on Google Docs,” The New York Times reports. The company also developed quite a bit of hardware, including its Tensor Processing Units (TPUs), now in the fifth generation and used to train Gemini.

Related:
YouTube Blows Past Q1 Forecast, Ad Sales Rise 21% To $8.1 Billion, MediaPost, 4/26/24