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Alphabet’s stock soars amid strong Q1 earnings and first-ever dividends. The company also plans to expand its AI efforts.
Alphabet’s executives detailed a robust first-quarter performance that exceeded analysts’ expectations on their earnings call.
The company revealed plans to expand artificial intelligence (AI) across its product line and introduced a shareholder dividend for the first time.
This news helped boost Alphabet’s stock, which saw an 11% increase in extended trading and has risen 25% since the beginning of 2024.
Gemini AI on the Rise
AI was prominently featured in the discussion, with Google and Alphabet CEO Sundar Pichai highlighting the ongoing development of Google’s advanced AI model, Gemini, and its integration into Google Search.
Pichai emphasized that the company is exploring generative AI to enhance search functionalities with AI-generated summaries. Google is focusing on enhancing user experiences while directing traffic to websites and merchants.
Investment in AI technology has been significant for Alphabet, with associated high costs due to the intensive power and expensive equipment required.
Despite these costs, Pichai expressed confidence in achieving sustainable margins and outlined potential revenue streams from AI through advertising, Google Cloud, and various subscriptions.
Alphabet’s Chief Financial Officer, Ruth Porat, noted that the quarter’s $12 billion capital expenditure primarily supported enhancements in their technical infrastructure to bolster AI capabilities.
Google Advertising and Search
Advertising continues to be a major revenue driver for Alphabet, where generative AI is increasingly utilized to streamline ad creation and placement, optimizing ad delivery to target users more effectively.
In recent developments, Alphabet has also focused on improving ad integration within search results, facilitating direct product availability and purchasing options across 23 countries.
First-Ever Dividends
The earnings call also marked a significant milestone with Alphabet announcing its first-ever dividend, reflecting its strong financial position and commitment to enhancing shareholder value, alongside a new $70 billion stock buyback program.
