The Alphabet parent company of Google and YouTube reported strong first-quarter earnings, driven by robust performance across its core search advertising business. Additionally, Alphabet’s ongoing investment in artificial intelligence (AI) contributed to significant growth across all segments. The company, led by Chief Executive Sundar Pichai, saw shares rise nearly 5% after a 2.5% rally during regular trading on Thursday. Despite the surge, Alphabet’s stock continues to fall 16% year-to-date amid broader tech sector sell-offs and tariff-related concerns on Wall Street.
Alphabet’s board approved additional share buybacks of $70 billion, boosts its dividend to $0.21 per share. In Google advertising, Alphabet reported revenue of $90.2bn, up 12% on the year, surpassing analysts’ expectations. The search advertising segment accounted for 50.7% of total revenue, an 9.8% year-on-year increase. Google’s AI feature, Google Search’s AI Overviews, gained significant popularity, receiving 1.5 million users per month. However, the rollout has led to decreased traffic for independent websites. The company also warned of a potential decline in advertising revenue due to the impact of the U.S. tariff policy.
Google Cloud revenue rose 28% year-on-year, driven by GCP growth, AI infrastructure, and generative AI solutions. In first-quarter profitability, operating income surged 200% compared to a year ago, reaching $2.18bn. While revenue slightly missed forecasts, the sharp cost surge suggests strong AI investments. The company expects to invest $75bn in capital expenditure and remains the third-largest cloud provider.
In the YouTube ad business, Alphabet’s revenue reached $8.93bn, up 10% year-on-year, slightly below analysts’ expectations. However, the segment has accelerated due to growth in YouTube TV and podcasts. The company’s self-driving car unit, Waymo, contributed $450 million, down 9% from a year earlier. Waymo emerges as a loss-making company during the quarter. CFO Ashkenazi noted that Waymo continues to progress in scaling and developing its business model.
Overall, Alphabet’s strong Q1 results reflect healthy growth and momentum across all segments. The company’s strategic investments, particularly in AI, continue to yield returns. The ongoing focus on improving transparency and sustainability could position Alphabet for future advancements.
