Google’s parent company Alphabet beats Q1 earnings estimates, announces $70 billion stock buyback

Alphabet announced a $70 billion stock buyback and posted Q1 profits and revenues that exceeded expectations on Tuesday. The demand for cloud services was one of the factors that contributed to the favourable results, and ad sales held up better than anticipated. This news pleased investors, who sent shares of Google's parent company up about 4 per cent in after-hours trading.

Alphabet's earnings per share of $1.17, excluding items, exceeded the average estimate of $1.07 per share. However, Senior Analyst at Insider Intelligence, Max Willens, pointed out that although Google had surpassed revenue and earnings per share predictions for the quarter, investor optimism remained modest. Although Alphabet's cloud computing division generated a profit, it still needs to catch up to its two main competitors, and its growth is slowing. Despite this, sales for the unit rose 28 per cent to $7.41 billion.

Advertisers are the primary source of Alphabet's sales, but they have cut back on spending in response to consumers returning to in-store shopping. In addition, advertisers are experimenting with new platforms such as TikTok, which caters to a younger audience. Alphabet reported a slight dip in ad sales, from $54.66 billion to $54.55 billion, but this is only the third such decline in the company's history since going public in 2004.

Alphabet has been implementing cost-cutting measures, such as reducing employee perks and resource usage, to maintain tight cost control in the face of economic downturns. In January, the company decided to cut 12,000 jobs. CFO Ruth Porat told employees in an internal email in March to expect additional cost-cutting measures in the coming months.

Meanwhile, Google is competing with rivals like Microsoft, which recently committed $10 billion to OpenAI to develop long-form response AI software that can answer queries and prompts. Although Microsoft beat Wall Street's estimates for Q3 profits and revenue, Google is working to keep pace with its competitors in the AI space.

Despite a decrease in net profits from $16.44 billion to $15.05 billion in the first quarter, Alphabet's Q1 revenue of $69.79 billion exceeded Refinitiv's estimate of $68.95 billion. Shares of rival tech companies, such as Meta Platforms and Amazon, were also up by 2 per cent.

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