Google parent announces stock buyback, modest beat on ad sales

Get ready to celebrate, because Alphabet Inc just announced a $70 billion stock buyback and posted impressive first-quarter profits and revenue! Cloud services are in high demand and ad sales held up better than expected, causing investors to cheer and sending shares of the Google parent up 1.6%.

While first-quarter ad sales dipped slightly from last year to $54.55 billion, they still beat analyst estimates of $53.71 billion. This marks the third decline for the company since going public in 2004, but it was the second in a row following a fourth-quarter ad sales drop of 3.6%.

Excluding items, Alphabet reported earnings per share of $1.17, beating the average estimate of $1.07 per share. “Google exceeded both revenue and earnings per share expectations this quarter, but reasons for investor optimism are modest,” said Insider Intelligence senior analyst Max Willens.

While turning a profit in cloud computing is “notable,” according to Willens, “the reality is that Google Cloud remains comfortably behind its two most important competitors, and its growth is slowing.” Sales for the unit rose to 28% to $7.41 billion.

Advertisers, who contribute the bulk of Alphabet’s sales, have curtailed their spending in response to a shift by consumers back to in-store shopping in the wake of eased masking and other restrictions. Marketers are experimenting more with new platforms like TikTok, which attracts a more youthful audience.

Alphabet has been looking to keep a tight control on costs amid recession fears and in January decided to cut about 12,000 jobs. Chief Financial Officer Ruth Porat told investors on a conference call that she expected capital expenditures this year to be “modestly higher” than in 2022. She said Alphabet endeavors to “durably engineer our cost base” in order to invest in priorities like cloud computing and artificial intelligence.

Alphabet’s Google unit has been working hard to keep pace with rivals, notably Microsoft Corp, in rolling out new artificial-intelligence software that can generate long-form responses to queries and other prompts. Microsoft committed $10 billion to OpenAI whose ChatGPT software has been the talk of Silicon Valley since a free version was introduced in November.

Microsoft on Tuesday also beat Wall Street estimates for third-quarter profit and revenue, driven by growth in its cloud computing and Office productivity software businesses, pushing its shares up 8.5% in after-market trading. Shares of rival tech companies Meta Platforms Inc and Amazon.com Inc were up 2.3% and 5.3%, respectively.

Alphabet’s revenue for the quarter ended March 31 stood at $69.79 billion compared with estimates of $68.95 billion, according to Refinitiv data.

It reported net profit of $15.05 billion for the first three months of the year compared with $16.44 billion a year earlier.

(Reporting by Akash Sriram in Bengaluru and Greg Bensinger in San Francisco; Editing by Arun Koyyur, Sayantani Ghosh and Matthew Lewis)

with Mark Geist

with Dr. Dave Brat

with Jobob

with Eric Scheiner

By Jane Lanhee Lee OAKLAND, California (Reuters) – Terra Quantum, a quantum computer hardware and software startup based in Germany and Switzerland,…

TOKYO (Reuters) – Japanese Prime Minister Fumio Kishida said on Tuesday the country supports the development of industrial uses of generative artificial…

By Hyunsu Yim (Reuters) -Netflix Inc said on Tuesday it will invest $2.5 billion in South Korea over the next four years…

BEIJING (Reuters) – China’s financial hub of Shanghai will promote investments in specialized technology including chip design, circuitry and artificial intelligence as…