Google parent Alphabet Inc. released a quarterly report Thursday showing it continues to reap double-digit revenue gains from its digital advertising empire, while breaking potentially lucrative new ground in the field of artificial intelligence.
The results for the first three months of the year are the latest evidence that Google has regained its momentum after an unprecedented slowdown in 2022 following the pandemic.
Alphabet punctuated its renewed strength by also revealing plans to begin paying shareholders a quarterly dividend for the first time since Google went public 20 years ago. It’s something that two older tech powers, Microsoft and Apple, have been doing for years. Alphabet’s quarterly dividend of 20 cents per share will be paid on June 17.
Investing.com analyst Thomas Monteiro hailed 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 Google will likely owe 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 period last year to $80.54 billion, which beat the projections of analysts surveyed by FactSet Research. This marked the fourth consecutive quarter of accelerated year-over-year revenue growth for the Mountain View, California, company.
Alphabet earned $23.66 billion, or $1.89 per share, an increase of 57% from the comparable quarter last year. Earnings per share also eclipsed analyst estimates that were guiding investors.
The company’s stock price soared nearly 16% in Thursday’s extended session following the news. This reaction contrasted sharply with how investors reacted to a report covering the same quarter with Facebook’s parent company. Meta Platforms also reported an increase in advertising revenue, but provided a disappointing outlook for the April-June period, while warning that its profits would be reduced by increased spending on AI technology.
As has been the case throughout the company’s history, most of the money came in through a digital advertising network anchored in Google’s dominant search engine. Google’s advertising revenue totaled $61.66 billion in the first quarter, up 13% from last year.
Despite its continued success, Google faces a dual threat that could threaten its future growth.
The U.S. Justice Department is targeting its search engine in a lawsuit alleging the company abused its power by negotiating lucrative deals with Apple and other companies to give it an unfair advantage over potential competitors, thereby stifling innovation as well as competition.
After a two-month trial last fall, Closing arguments in the biggest U.S. antitrust case in a quarter are expected to take place next week, and a federal judge is expected to decide whether Google broke the law by the end of this year.
People may also not need to rely as much on Google search information to answer their questions…
