Google's corporate parent Alphabet Inc. on Thursday released a quarterly report showing it's still reaping double-digit revenue gains from its digital advertising empire while sowing potentially lucrative new ground in artificial intelligence.
The results for the first three months of the year provided the latest evidence that Google has regained its momentum after an unprecedented downturn in 2022 coming out of the pandemic.
Alphabet punctuated its renewed vigor by also disclosing plans to begin paying shareholders a quarterly dividend for the first time since since Google went public 20 years ago. It's something that two older technology powerhouses, Microsoft and Apple, have been doing for years. Alphabet's quarterly dividend of 20 cents per share will be paid June 17.
Investing.com analyst Thomas Monteiro praised the decision to pay a dividend as "a breath of fresh air for the tech market" that should also make investors more likely to support the increased amounts that Google will likely need to spend on developing AI products that could take years to pay off.
In the January-March period, Alphabet's revenue rose 15% from the same time last year to $80.54 billion, which surpassed the projections of analysts surveyed by FactSet Research. It marked the fourth consecutive quarter of accelerating year-over-year revenue growth for the Mountain View, California, company.
Alphabet earned $23.66 billion, or $1.89 per share, a 57% increase from last year's comparable quarter. The earnings per share also eclipsed the analyst estimates that steer investors.
"We are incredibly well set up, given the innovation path we are on," Alphabet CEO Sundar Pichai told analysts during a Thursday conference call.
The company's stock price soared by nearly 13% in Thursday's extended trading after the news came out. That reaction was a stark contrast to how investors responded to a report covering the same quarter from Facebook's parent. Meta Platforms also reported a surge in ad revenue but provided a disappointing outlook for the April-June period, while also warning its profits would be squeezed by increased spending on AI technology.
If Alphabet's shares move in a similar trajectory during Friday's regular trading session, the stock will hit a new all-time high that will push the company's market value above $2 trillion.
As has been the case since throughout the company's history, most of the money came in through a digital advertising network anchored by Google's dominant search engine. Google's ad revenue totaled $61.66 billion in the first quarter, up 13% from last year.
Despite the ongoing success, Google is facing dual threats that could threaten its future growth.
The U.S. Department of Justice is taking aim at its search engine a lawsuit alleging the company has abused its power by negotiating lucrative deals with Apple and other companies to give it an unfair advantage over potential rivals, stifling innovation as well as competition.
After a two-month trial last fall, the closing arguments in the biggest U.S. antitrust case in a quarter are scheduled to unfold next week and a federal judge is expected to rule whether Google has been breaking the law by the end of this year.
People also may not need to rely as much on Google's search information to answer their questions and find other information as the artificial intelligence technology that Google, Microsoft and other industry stalwarts are building becomes more sophisticated. If AI gradually supplants the role that Google's search engine has filled for the past quarter century, Alphabet's ad sales also could dwindle.
For now, AI is helping to fuel rapid growth in Google's cloud computing division, which saw its first-quarter revenue climb 28% from last year to $9.57 billion.
But the cloud division also has become a tinder box for Google management as dozens of employees have staged protests over a $1.2 billion contract with the Israeli government that includes AI technology as part of Project Nimbus.
The protesting employees believe Project Nimbus is being lethally deployed by the Israeli military in the Gaza war — a contention Google has denied. The divisive issue came to head earlier this month during an employee sit-in at Google offices in Sunnyvale, California, and New York that resulted in more than 50 workers being fired.
Alphabet ended March with nearly 181,000 employees, a decrease of nearly 10,000 workers from the previous year. Management has cycled through several rounds of mass layoffs to help boost profits while Google ramps up its spending on AI technology.
Michael Liedtke is an AP technology writer
