Alphabet, the parent company of Google, has delivered impressive financial results for the first quarter of the year, exceeding analysts’ expectations and propelling its market capitalization past the $2 trillion mark. In the first quarter of 2024, Alphabet reported earnings per share of $1.89, significantly surpassing analysts’ estimates of $1.51. Moreover, the company’s revenue soared to $80.54 billion, marking a 15% increase from the previous year and surpassing Wall Street’s projection of $78.59 billion. This growth rate represents Alphabet’s fastest expansion since early 2022.
The company’s earnings per share (EPS) came in at $1.89, outpacing the expected $1.51 per share. Net income also experienced a substantial jump, reaching $23.66 billion – a strong 57% increase compared to the same period last year. “Our results in the first quarter reflect strong performance from Search, YouTube and Cloud. We are well under way with our Gemini era and there’s great momentum across the company. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation,” Sundar Pichai, CEO, commented on the matter.
Surprisingly, it is not AI that proved to be the impetus for Alphabet’s growth during the first quarter (despite the fact that the company has been increasingly focused on AI in recent months). Google Search, the lifeblood of Alphabet’s advertising empire, maintained its dominance as a revenue driver as advertising sales on Search surpassed expectations. For the quarter ended March 31, Google Search accounted for over half of the quarterly revenue, bringing in a total of $46.15 billion. YouTube, another key pillar of Alphabet’s advertising empire, also delivered strong results. Advertising revenue on the video-sharing platform climbed to $8.09 billion, exceeding analysts’ estimates.
Speaking of AI, during the earnings call, Pichai alluded to the company’s “Gemini era,” a period characterized by a strategic emphasis on advancements in AI. If you have been following us, then the tech giant’s focus on AI is evident across various Google products and services. For instance, the recent introduction of “AI overviews” within Search leverages AI capabilities to provide users with a more comprehensive understanding of search results. Google’s AI-powered chatbot (Gemini, formerly known as Bard) has shown its mettle as well – as of January, Alphabet’s competitor to ChatGPT had an average of 142.4 million monthly active users.
Additionally, the company’s traffic acquisition costs (TAC) amounted to $12.95 billion, slightly higher than analysts’ forecasts. Apart from this, Alphabet’s board of directors approved the company’s first-ever cash dividend of 20 cents per share, which is scheduled to be paid on June 17 to shareholders of record as of June 10, alongside the repurchase of an additional $70 billion in shares. One of the most significant takeaways from Alphabet’s Q1 report is the impressive performance of Google Cloud. The cloud computing unit, which has historically lagged behind established rivals Amazon Web Services (AWS) and Microsoft Azure, reported revenue of $9.57 billion. This figure exceeded Wall Street’s forecast, while reflecting a year-over-year increase of 28%. And if this is not enough, the unit also reported a more than fourfold increase in operating income to $900 million.
