Google’s parent company, Alphabet, generated sales, excluding partner payouts, of $67.6 billion for the three months that ended on March 31, beating analyst expectations of $66.1 billion, sending its shares up 13 per cent in after-hours trading.
The tech behemoth reported its net income for the quarter at $1.89 per share, easily topping the Wall Street forecast of $1.53 per share, Bloomberg reported.
In a major move, Alphabet also declared its first-ever dividend at 20 cents per share and confirmed plans to repurchase another $70 billion in stock.
Much of the success that the company has at the moment is associated with heavy investments it made in artificial intelligence (AI), which has enhanced its service in cloud computing. Google Cloud has reported a 28 per cent increase in revenue for the quarter.
“The main thing is, we are really excited about the benefit from AI for our cloud customers, Ruth Porat, CFO of Alpphabet, had said. “We saw an increasing contribution from our AI solutions,” Porat as quoted as saying by Bloomberg. “The Google Cloud results really reflect broad strength across the industry.”.
It was quick to integrate AI into some of its products, including the enterprise software suite, as the popularity of generative AI tools like OpenAI’s ChatGPT grew.
However, Google needs to reflect on how it can compete in generative AI without undermining its main money earner-search advertising. Though plagued by various issues from regulatory scrutiny to complaints against its AI model Gemini, Google is still striving to claw back its lead in a competitive market, which includes the likes of Amazon.com Inc. and Microsoft Corp. In the current quarter, the company has continued its focus on technical infrastructure by earmarking $12 billion worth of investments.
Sundar Pichai ‘comfortable’
Alphabet CEO Sundar Pichai expressed confidence in managing costs and transitioning monetisation strategies related to AI effectively, saying, “I am very, very confident we can manage the cost of how to serve these queries” and “comfortable and confident that we will be able to manage the monetization transition here well,” Bloomberg quoted Pichai as saying.
Google’s Cloud business had $9.6 billion in sales and $900 million in profit—both ahead of what analysts had modelled.
Google’s search advertising and YouTube platforms powered the gains. Revenue from search advertising soared 14 per cent to $46.2 billion. But with competition growing from Meta and Snap Inc, Google’s powerful advertising business shows enervating signs, that may not sound encouraging for it.
Forrester Principal Analyst Lee Sustar said Google Cloud was typically a sore spot on the Alphabet earnings calls for years. “These latest results show that Google Cloud’s AI offerings got enterprise customers not just to take another look but to spend some serious money,” Bloomberg quoted Sustar as saying.
Google Cloud has shown that this is indeed a sturdy unit without depending on the tech giant’s ad businesses to cover its operating losses—just as it has always been, he said.
YouTube also recorded a stellar financial performance, with revenues of $8.1 billion, aided by improved efforts in the monetization of ads and tougher policies towards ad blockers.
Alphabet’s Other Bets revenues, including Waymo and Verily, amounted to $495 million, yet it reported losses, indicating the problems it faces and sectors of growth that the company will be working on.
(With inputs from Bloomberg)
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Published: 26 Apr 2024, 06:42 AM IST
