Here’s how cloud and artificial intelligence make Alphabet’s (Google) accounts shine
Accounts above expectations and first dividend for Google's parent company. Facts, numbers and stock market reactions after the publication of Alphabet's quarterly report
Shares of Alphabet, Google's parent company, rally after the publication of its quarterly accounts.
The Sundar Pichai-led technology holding company beat expectations for the quarter in terms of sales, profits and advertising and announced its first dividend. Earnings per share were $1.89 on revenue of $80.54 billion (up 15% from a year ago), versus expectations for $1.51 on $78.59 billion.
Google Search, YouTube and Google Cloud haven't missed a beat either. But Alphabet's first-ever dividend was the most successful, helping the stock rise more than 12%. Alphabet's after-hours surge of nearly 16% following the report boosted its stock market value by about $300 billion to more than $2 trillion.
All the details.
THE CLOUD AND AI DRIVE REVENUES
Alphabet reported quarterly sales of $80.5 billion, up 15% from a year earlier, its fastest growth rate since early 2022, and above analysts' estimate of $78.8 billion. dollars.
Growing demand for its cloud services on the back of growing adoption of artificial intelligence and steady advertising spending contributed to the result.
Specifically, Google search and related revenue increased 14% to $46.2 billion, above analysts' estimate of $45 billion for the quarter. Advertising sales on YouTube, Google's video platform, increased 21% to $8 billion, above the $7.7 billion expected by analysts.
Revenue at Google Cloud, the company's unit that rents software and IT services to other companies, grew 28% to $9.6 billion, versus consensus estimates of $9.4 billion. Advertising sales rose 13% in the quarter to $61.7 billion.
PROFIT ABOVE CONSENSUS
Net profit jumped 57% to $23.66 billion, from $15.05 billion a year earlier, beating analysts' estimates of $18.9 billion. Earnings per share reached $1.89, up from $1.17 last year and beating the average estimate of $1.53.
EXPENSES ALSO INCREASE
Alphabet's capital spending rose to $12 billion — more than the $10 billion expected — and Chief Financial Officer Ruth Porat said the company will spend at least that amount per quarter for the rest of the year.
THE WORDS OF CEO PICHAI
In the conference call, Alphabet CEO Sundar Pichai said that the quarter represented "strong performance from Search, YouTube and Cloud" and that Google is "well underway with our Gemini era," referring to its model of generative artificial intelligence.
“Our leadership in AI research and infrastructure, and our global product presence, positions us well for the next wave of AI innovation,” Pichai added.
FOCUS ON ARTIFICIAL INTELLIGENCE
Even though ambitions in artificial intelligence suffered a notable setback in the first quarter, reports the New York Times. In February, users realized that Google's chatbot was creating images of people that weren't always historically accurate. Google executives promised to fix the problem and in the meantime suspended the chatbot's ability to generate images of people.
“To continue paying for Gemini and other AI products, Alphabet has tried to cut costs, including by laying off workers. Since the beginning of the year, it has laid off employees in many of its business units, including YouTube, finance and its main engineering division,” the Times notes.
At the same time, “The financial and investment plans in artificial intelligence of Google and Microsoft have been the subject of particular attention in light of the experience of rival Meta” notes the Financial Times. Shares of the social media group fell 11% after Chief Executive Mark Zuckerberg said Wednesday that it would spend billions more than expected on artificial intelligence, warning that costs would have to rise "significantly before to get a lot of revenue from some of these new products,” added the Ft .
THE FIRST DIVIDEND FOR ALPHABET
Additionally, Alphabet's board yesterday announced its first-ever dividend of 20 cents per share that it will pay on June 17 and a $70 billion share buyback, supported by rising earnings across its core business lines. The move thrilled investors who sent shares up nearly 16%.
As Reuters recalls, just three months ago, Alphabet's Big Tech rival Meta Platforms announced its first-ever dividend , a move that boosted the social media company's stock market value by $196 billion on the day. following.
IT MAKES STOCKS RUN ON WALL STREET
Shares rose as much as 13% in after-hours trading, allowing Alphabet to add more than $250 billion to its market capitalization and push past $2 trillion, joining "Magnificent Seven" rivals Microsoft, Apple and Nvidia, the Financial Times further underlines.
ANALYSTS COMMENT
“The dividend payments and buybacks announced by Alphabet in addition to the solid earnings beat are not only a breath of fresh air for the technology market as a whole, but also a very smart strategy for the search engine giant that finds itself at facing a difficult time of year,” said Thomas Monteiro, senior analyst at Investing.com.
For Brad Erickson of RBC Capital Markets, “Perhaps the most important thing about the stock's big after-hours move is that margins were significantly higher than expected.”
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/ecco-come-cloud-e-intelligenza-artificiale-fanno-brillare-i-conti-di-alphabet-google/ on Fri, 26 Apr 2024 12:49:56 +0000.