Alphabet Stocks Rise on Q1 Earnings Beat, AI-Fueled Strong Ad Sales, New $70...

摘要： TMTPOST -- Alphabet Inc. shares rose as much as nearly 6% in...

TMTPOST -- Alphabet Inc. shares rose as much as nearly 6% in after hours trading on Thursday after Google parent posted stronger-than-expected top and bottom line. The performance highlighted strong advertising sales fueled by artificial intelligence (AI) investments, easing concerns over headwinds including economic slowdown and tariff war. Stock investors also welcomed Alphabet’s new buyback as its board of directors authorized the company to repurchase up to an additional $70.0 billion of shares.

Credit：Medium

Alphabet revenue for the quarter ended March 31 grew year-over-year (YoY) to $90.32 billion, beating Wall Street forecast of $89.1 billion polled by Bloomberg. The diluted earnings per share (EPS) for the quarter soared 49% YoY to $2.81, smashing analysts’ estimates of $2.01. Operating income was $30.61 billion with a 20% YoY increase, also ahead of analysts expected $28.86 billion. The operating margin climbed 2 percentage points YoY to 34%, topping expectation of 32.3%.

Alphabet’s core business digital advertising slowed down but still stronger than Wall Street projection. The cloud computing business, which is deemed as the future growth engine, slightly fell short of anticipated.

Google advertising brought $66.89 billion for the March quarter with a 8.5% YoY increase, cooling from a 10.6% YoY rise for three months ago. Analysts had anticipated ad revenue to be $66.39 billion, represent a increase of 7.7%. In the segment, Google Search maintained its beat while YouTube ad missed by sales. Revenue from Google Search and Other gained 9.8% YoY to $50.70 billion, versus analysts projected $50.30 billion. YouTube ad recorded revenue of $8.93 billion with a 10% YoY increase, whereas analysts had expected YouTube contributed $8.94 billion.

Alphabet and Google CEO Sundar Pichai told analysts that Google was monetizing AI Overviews "at approximately the same rate" as traditional search results. Additionally, he said Google's AI tools were helping advertisers better target consumers.

Morningstar analyst Malik Ahmed Khan noted that it was too early to expect to see any major impacts on ad spending. But Alphabet acknolweded it would not be immune to the macroeconomic environment. Google executives noted that the halting of the "de minimis" tariff exemption for goods worth less than $800 would impact ad spending from retailers.

Revenue from Google Cloud refreshed quarterly record, jumping 28% YoY to $12.26 billion for the first quarter, but less than analysts estimated $12.32 billion. The increase in revenue was a sharper was roughly in line with a 30% growth for the previous quarter. Operating income of the business more than doubled YoY to a new quarterly record of $2.18 billion, beating estimated $1.94 billion. The operating income steadies with an increase of 142%, the same as the December quarter.

Cloud is the business of tech giants that is currently most evidently benefiting from generative AI applications as their investments in developing AI helped drive demand for cloud services. Pichai said the double-digit revenue growth reflected strong demand for AI-powered Google Cloud.

“We’re pleased with our strong Q1 results, which reflect healthy growth and momentum across the business. Underpinning this growth is our unique full stack approach to AI. This quarter was super exciting as we rolled out Gemini 2.5, our most intelligent AI model, which is achieving breakthroughs in performance and is an extraordinary foundation for our future innovation,” said Pichai in a statement. “Search saw continued strong growth, boosted by the engagement we’re seeing with features like AI Overviews, which now has 1.5 billion users per month. Driven by YouTube and Google One, we surpassed 270 million paid subscriptions. And Cloud grew rapidly with significant demand for our solutions.”

While many expected Alphabet to slash capital expenditures , the actual CapEx for the first quarter came in hotter than the median estimate of $17.1 billion, at $17.2 billion. That represented Alphabet’s CapEx didn’t cool with around the same pace of a 43% YoY increase for the last quarter of 2024, compared with a 10.2% increase for the full year. The company also reaffirmed its ambitious AI buildout plans and backed its $75 billion CapEx guidance for the year 2025.

The spending plan brought relief for investors. There were concerns across Wall Street that tech giants are pulling back on new data center commitments. Wells Fargo analysts in a note earlier this week said Amazon’s cloud computing business Amazon Web Services (AWS) has paused some commitments about new data center leases after Microsoft Corporation decided to slow its pace of investments in artificial intelligence (AI) infrastructure.

"I saw the narrative around infrastructure spending as being one that was particularly a negative narrative in the market, suggesting that AI investments had peaked and that this was a sign that the bubble was deflating. And I think what Google told us today was it’s absolutely not the case," said Will Rhind, CEO of global ETF issuer GraniteShares.