Google's parent company Alphabet (GOOG, GOOGL) rose more than 11% in premarket trading on Friday. The company excited investors with the announcement of a $0.20 per share cash dividend program following outstanding quarterly results that beat expectations for sales and earnings.
The board also authorized up to an additional $70 billion in stock repurchases.
“Our results in the first quarter reflected strong performance in search, YouTube and cloud,” CEO Sundar Pichai said in a statement Thursday. Our global product footprint positions us well for the next wave.” Contribute to the promotion of AI innovation. ”
Revenue excluding traffic acquisition costs rose 16% year over year to $67.59 billion, beating analysts' expectations of $66.07 billion, according to Bloomberg data. The company reported adjusted earnings per share of $1.89, compared to consensus estimates of $1.53.
In the field of artificial intelligence, Google has been widely seen as catching up to Microsoft (MSFT), which was among the first in the tech industry to enjoy the cultural excitement around consumer AI chatbots. Microsoft invested in OpenAI, the company behind the popular ChatGPT.
But on Thursday's earnings call, Google executives emphasized that the company is positioned to lead the transition to an AI-centric technological world and is focused on investments that will accelerate the development of new models.
Pichai said the company has a clear path to monetizing its AI breakthroughs through advertising, cloud and subscriptions.
He also touted the integration of AI tools into Google Search, allowing users to ask more complex and descriptive questions.
But it remains unclear how AI will impact Google's search business, as new AI-based interfaces could replace traditional search and change the way users interact with the web.
Investors are also wary of the costs and returns associated with AI. Alphabet's report comes a day after advertising rival and tech giant META said its expenses have increased this year and that it will take time for AI investments to generate significant returns. Meta stock fell more than 10% in response to the comments.
Alphabet reported $12 billion in capital spending for the quarter, most of it related to servers and data centers. CFO Ruth Porat said on a conference call that similar spending is expected in the coming quarters, reflecting his confidence in the company's AI investments.
Cloud revenue rose nearly 30% year-over-year for the second consecutive quarter to more than $9 billion.
Google is working to gain more share in the cloud market, and currently ranks third behind rivals Amazon (AMZN) and Microsoft.
Advertising revenue, the core of Google's business, rose 13% to $61.66 billion.
Hamza Shaban is a reporter for Yahoo Finance, covering markets and economics. Follow Hamza on Twitter @hshaban.
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