Alphabet (GOOG, GOOGL) released its Q1 earnings on Tuesday, exceeding projections for both revenue and profit. The company also approved a significant $70 billion stock buyback plan. The announcement led to a 5% increase in Alphabet's stock during after-hours trading.
Despite the digital advertising industry's slowdown, Alphabet surpassed revenue expectations in its advertising sector, which includes Google and YouTube. YouTube's ad revenue beat several previous quarters' poor results with a reported $6.69 billion.
Alphabet's Google Cloud branch brought profit for the first time, and its revenue grew at the fastest rate among the company's main business segments, with a 28% increase.
Alphabet's earnings report was compared to analysts' predictions gathered by Bloomberg. The following are the significant figures:
Actual Revenue: $69.7 billion versus the expected $68.96 billion
Actual Earnings Per Share (EPS): $1.17 versus the predicted $1.08
Actual Google Ad Revenue: $54.55 billion compared to the projected $53.75 billion
Actual YouTube Ad Revenue: $6.69 billion compared to the anticipated $6.64 billion.
“We are pleased with our business performance in the first quarter, with Search performing well and momentum in Cloud,” said Alphabet and Google CEO Sundar Pichai in a statement.
“We introduced important product updates anchored in deep computer science and AI. Our North Star is providing the most helpful answers for our users, and we see huge opportunities ahead, continuing our long track record of innovation.”
Alphabet disclosed several expenses associated with its cost-saving initiatives, including $2.6 billion in charges for office space cutbacks and layoffs. Like many other tech firms, Alphabet has been aggressively cutting expenses and has declared plans to reduce 12,000 jobs in January.
Google has been competing in the AI race that started when ChatGPT became the tech industry's new growth catalyst. However, Google's AI chatbot, Bard, failed to impress some experts in the last few months, while Microsoft's mega-investment in OpenAI, which developed ChatGPT, has garnered significant attention.
Alphabet's AI strategy is changing, and two AI teams, Google Research's Brain unit and DeepMind, are being merged to reflect this shift. Tuesday's earnings statement revealed a separate breakdown of AI costs for the first time, with losses totaling $3.3 billion during the quarter, while the Other Bets segment incurred a loss of $1.23 billion. Alphabet's operating income for the quarter was $17.4 billion.
