Shares of Alphabet (GOOGL) surged 5% in after-hours trading after the tech giant reported an impressive first-quarter earnings. Investors were particularly excited about how AI investments are driving the company’s growth.
Earnings per share far exceed Wall Street’s forecast
Alphabet’s earnings per share (EPS) came in at $2.81, easily surpassing analysts’ expectations of $2.01. This marks a significant increase from $1.89 per share in the same period last year. The company’s revenue reached $90.23 billion, surpassing forecasts of $89.17 billion and rising 12% year over year. Additionally, net income soared by 46%, reaching $34.5 billion.
The company’s main business—advertising—also showed strong growth, rising 10% to $50.7 billion, surpassing analysts’ predictions. This growth comes despite increased competition in the AI space from rivals like OpenAI’s ChatGPT, Microsoft’s Copilot, and Elon Musk’s Grok.
Alphabet’s CEO, Sundar Pichai, highlighted that AI is a key factor in the company’s growth. He mentioned that AI Overviews, which are AI-generated answers appearing at the top of many search results, are driving strong growth in the search business. Pichai also mentioned that the company is expanding this feature to more users, countries, and search queries.
Google Cloud revenue grew by 28% year-over-year, reaching $12.26 billion. Although this slightly missed the forecast, the company’s operating income more than doubled, rising by 142%, showing strong efficiency improvements.
Alphabet spent $17 billion in capital expenditures during the quarter, slightly above the guidance. Despite these heavy investments, the company’s free cash flow grew by 13%, reaching $19 billion.
Alphabet’s recent performance highlights growth in its traditional business, scaling in cloud services, and AI-driven success. In a time of economic uncertainty, Alphabet stands out as a major performer.
