Written by Greg Bensinger and Akash Sriram
(Reuters) – Alphabet announced its first-ever dividend and $70 billion in stock buybacks on Thursday, delighting investors whose stock price soared nearly 16% after the bell.
Google's parent company is giving back capital while spending billions on data centers to catch up with rivals in generative artificial intelligence. The dividend will be 20 cents per share.
Just three months ago, Alphabet's Big Tech rival Meta Platforms announced its first-ever dividend, boosting the social media company's stock market value by $196 billion the next day. Amazon.com is the lone holdout among big tech companies that don't pay dividends.
Alphabet beat expectations for the quarter, with sales, profits and advertising all being closely watched metrics.
“Alphabet's announced dividend payments and share buybacks based on its strong performance are not only a breath of fresh air across the tech market, but also a very smart strategy for the search engine giant as it faces a tough time this year.” said Thomas Monteiro, senior analyst.
investment dot com.
Alphabet's after-hours stock price rose nearly 16% on the news, increasing the company's stock market value by about $300 billion to more than $2 trillion.
In a call to discuss the results, CEO Sundar Pichai touted Google's AI products as a boon to the company's core search results. “We are pleased to see search usage increasing among people using AI Overview,” he said.
Revenue for the quarter ended March 31 was $80.54 billion, compared to expectations of $78.59 billion, according to LSEG data.
The search company's first-quarter revenue growth was driven by increased demand for cloud services on the back of increased adoption of artificial intelligence and stable ad spending.
Google reported that advertising increased 13% to $61.7 billion in the quarter. This compares to an average estimate of $60.2 billion, according to LSEG data.
Alphabet is coming off a fourth quarter in which ad sales fell short of targets amid increased competition from Amazon.com Inc., Facebook Inc. and new entrants such as TikTok, and its stock price plummeted. There is. The latter faces an uncertain future after President Joe Biden signed a bill that would ban popular apps if they are not sold within the next nine to 12 months.
Meanwhile, Google Cloud's revenue rose 28% in the first quarter, driven by a boom in generative AI tools that rely on cloud services to provide technology to customers.
Investors and experts have previously said that Google's cloud services are attractive to venture capital-backed startups developing generative AI technology because of their pricing and ease of integration with other tools. Ta.
(Reporting by Akash Sriram in Bengaluru and Greg Bensigner in San Francisco; Additional reporting by Noel Randewicz in Oakland, California; Editing by Sriraj Kaluvila, Kenneth Lee and Matthew Lewis)
