Alphabet records revenue at $67.6 billion surpassing expectations with AI-powered cloud growth, declares first dividend

Furthermore, the tech behemoth reported that its net income for the quarter had been $1.89 per share, easily topping the Wall Street forecast of $1.53 per share, the report further added.

In a major move, Alphabet declared its first-ever dividend at 20 cents per share and confirmed plans to repurchase another $70 billion in stock, sending shares up 13% in after-hours trading. 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 since reported a 28% 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 Alphabet, had said. “We saw an increasing contribution from our AI solutions,” She had added. “The Google Cloud results really reflect broad strength across the industry.”. Though a competitive landscape—tech giants, including Amazon and Microsoft, leading the cloud market—Google’s superior AI capabilities could close this gap.

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.

But Google needs to address the issue of whether 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 AI. This is the current quarter in which the company has continued its focus on technical infrastructure by capital expensing $12 billion worth of investments.

On a related note, CEO Sundar Pichai expressed confidence in managing costs and transitioning monetization 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.”.

Google’s search advertising and YouTube platforms powered the gain. Revenue for search advertising soared 14% to $46.2 billion, but the gain was powered by Google’s search advertising and YouTube platforms. With competition growing from Meta and Snap, Google’s powerful advertising business shows enervating signs that may sound encouraging for it. “Google’s Cloud business had $9.6 billion in sales and $900 million in profit—both ahead of what analysts had modeled.”.

Forrester Principal Analyst Lee Sustar spoke of the results, “For years, Google Cloud was typically a sore spot on the Alphabet earnings calls,” and added, “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,” as quoted by Bloomberg. Google Cloud has shown that this is indeed a sturdy unit without depending on the ad businesses of the tech giant to cover its operating losses—just as it has always been.

YouTube also posted good 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, thereby indicating the problems and sectors of growth that the company will be working on. While Alphabet continues to streamline operations and invest in AI, the tech giant remains a formidable player in the evolving digital landscape, showing an ability to embrace and succeed amid changed technologies and market dynamics.

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Published: 26 Apr 2024, 06:42 AM IST