Alphabet, the parent company of Google, rebounded from a challenging day for tech stocks with a surge in its stock price after Thursday’s closing bell. This turnaround was achieved by distributing billions of dollars to investors.
The tech giant unveiled its inaugural quarterly cash dividend, set at $0.20 per share to be distributed on June 17 to shareholders recorded as of June 10. Additionally, it disclosed a $70 billion share repurchase program. While such initiatives are applauded for rewarding shareholders and potentially bolstering stock prices, they draw criticism for potentially inflating stock values artificially without commensurate investment in employee welfare or business development.
Following the earnings report for the first quarter of the year, where Google surpassed analysts’ projections for both revenue and earnings, the company’s stock surged by up to 13% in after-hours trading.
Revenue for the quarter exceeded $80.5 billion, marking a 15% increase from the previous year’s corresponding period and surpassing the $78.75 billion projected by analysts, as per FactSet estimates. The company also disclosed a remarkable 57% year-over-year surge in profits, totaling almost $23.7 billion.
Sundar Pichai, CEO of Alphabet, attributed this success to the company’s investments in artificial intelligence, particularly highlighting the significant advancements made with its large language model and suite of AI products known as Gemini.
Pichai stated, “We are making significant progress in our Gemini era, with strong momentum across the organization. Our leadership in AI research and infrastructure, coupled with our expansive global product portfolio, positions us favorably for the upcoming wave of AI innovation.”
Google’s robust performance underscores how investors may reward tech firms for their commitments to artificial intelligence, widely perceived as the future of the sector.
Pichai further elaborated, “We have clearly defined avenues for AI monetization through advertising, cloud services, and subscription models,” during a call with analysts following the release of Thursday’s report.
While Google’s results showcased the benefits of strategic AI investments, Meta faced a decline in its shares on Thursday after revising its annual expense forecast to support its AI initiatives, despite posting better-than-expected earnings results on Wednesday.
However, apart from Google’s success, several other positive tech earnings reports on Thursday helped offset earlier sluggishness in tech stocks.
Snap results
Snap, the parent company of Snapchat, experienced a rise in its stock price after-hours following a positive first-quarter earnings report that surpassed Wall Street’s expectations.
In the first quarter of the year, Snap posted revenue of approximately $1.19 billion, marking a 21% increase compared to the same period last year. Additionally, the company noted a 10% year-over-year growth in daily active users. Snap’s outlook for the current quarter surpassed expectations.
Through efforts to enhance its advertising technology and undergo cost-cutting restructuring, Snap reported a net loss of $305 million for the March quarter, showing improvement over the previous year and surpassing analysts’ predictions. Following the report, Snap shares surged by roughly 25% in after-hours trading.
Microsoft earnings
Microsoft’s quarterly profits surged to $21.9 billion, up from $18.3 billion a year ago, showcasing the company’s successful focus on AI. Revenue saw a 17% year-over-year increase, reaching $61.9 billion.
In a statement, CEO Satya Nadella highlighted the pivotal role of Microsoft Copilot and Copilot stack in ushering in a new AI-driven era, fostering enhanced business outcomes across various sectors and job roles.
Following this announcement, Microsoft’s shares rose over 4% in after-hours trading on Thursday.
Jeremy Goldman, a senior director at eMarketer, noted in an analyst report that Microsoft’s early investments in OpenAI’s ChatGPT are evidently yielding dividends, particularly through innovations like Copilot for Microsoft365. This AI chat assistant seamlessly integrated into Microsoft’s suite of business tools showcases the fruits of these strategic investments.
Goldman also advised investors to monitor potential overspending on AI initiatives. Nonetheless, he commended Nadella’s forward-thinking approach, which is adding value by infusing intelligent capabilities throughout Microsoft’s product range, spanning from cloud services to desktop applications.
Additionally, Microsoft’s Azure cloud business demonstrated robust growth, with revenue surging by 31%, propelled by the positive impact of AI advancements.
Read More: Google fires 28 workers following protests in multiple cities
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