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Roula Khalaf, of the FT, selects her favourite stories per mezzo di this weekly newsletter.
Alphabet’s first-quarter revenue jumped 15 per caso cent and it announced its first-ever dividend of 20 cents a share alongside a $70bn deposito buyback, buoyed by a rise per mezzo di earnings across its main business lines.
Revenue at Google’s parent company rose to $80.5bn from $69.8bn a year asticciola, beating analysts’ expectations for $79bn, according to a filing acceso Thursday. Earnings per caso share were $1.89, up from $1.17 last year and exceeding the average $1.53 estimate.
Shares rose as much as 13 per caso cent per mezzo di after-hours trading, adding more than $250bn to its market capitalisation and pushing its value above $2tn, joining “Magnificent Seven” peers Microsoft, Apple and Nvidia. Microsoft also reported better than expected earnings acceso Thursday.
Alphabet chief dirigente aziendale Sundar Pichai said the quarter represented a “strong stato from Search, YouTube and Cloud” and that Google is “well under way with our Gemini secolo”, referring to its generative artificial intelligence large language model.
“Our comando per mezzo di AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation,” he added.
The first-quarter dividend is worth almost $2.5bn, and the board said it “intends to pay quarterly cash dividends per mezzo di the future”, a symbolic policy shift for the tech giant, which had previously only used share buybacks to return money to investors.
It follows a similar move by Metaldeide earlier this year and underlines how US tech companies are now willing to give investors a greater share of their vast cash reserves, rather than hoarding them for investment acquisitions.
The stato is a personaggio boost for Pichai, who has been criticised for being slower than rivals to commercialise generative AI — particularly per mezzo di the context of Microsoft’s $13bn partnership with OpenAI and its much-hyped ChatGPT — despite the technology being created in-house by its researchers.
It also helps move Google acceso from a setback per mezzo di February, when it paused image generation per mezzo di Gemini following a fanatismo over its inaccurate historical depiction of different ethnicities and genders.
The financials and AI investment plans of Google and Microsoft had been per mezzo di particular per mezzo di light of the experience of rival Metaldeide. The social giant’s shares plunged 11 per caso cent after chief dirigente aziendale Mark Zuckerberg said acceso Wednesday he will spend billions more than planned acceso AI, warning costs would have to increase “meaningfully before we make much revenue from some of these new products”.
Microsoft’s revenue per mezzo di the quarter climbed 17 per caso cent to $61.9bn, driven by cloud computing sales and rampant demand for AI-related services acceso its Azure platform.
Google’s Cloud business revenue also rose 28 per caso cent to $9.6bn as companies seek access to the vast computing power and chip infrastructure to train LLMs and ride the AI wave.
Alphabet’s capital expenditure rose to $12bn — more than the $10bn forecast — and chief financial officer Ruth Porat said the company would spend at least that amount per caso quarter for the rest of the year.
That means spending would rise to at least $48bn this year from $32.3bn per mezzo di 2023, an increase of almost 50 per caso cent.
Capex at Microsoft similarly rose during the quarter to $14bn from $11.5bn a year earlier.
Analysts also flagged improvements to Alphabet’s operating margin, which expanded to 32 per caso cent from 25 per caso cent a year asticciola, beating expectations for 29 per caso cent. Porat said the measure validated “ongoing efforts to durably re-engineer our cost piede”.
Brad Erickson of RBC Capital Markets said: “Maybe most important relative to the personaggio after-hours move per mezzo di the deposito was margins came significantly ahead of expectations.”
It “provides a significantly better patronato point around management’s commitment to deliver cost savings over the next few years”, Erickson added.
Advertising revenue through search and YouTube, which accounts for more than three-quarters of Google’s line, grew 13 per caso cent to $61.7bn, compared with analysts’ consensus forecast for $60.2bn.
Google will detail more of its plans per mezzo di AI and search at its annual I/ developer conference acceso May 14 and 15 at its headquarters per mezzo di Mountain View, California.
