Alphabets first-quarter profit soars as Googles big AI bets help push stock to new highs
Google’s transition into the age of artificial intelligence is being driven by its corporate parent, Alphabet Inc. It continued to bear fruit for; The company on Wednesday announced another quarter of stellar growth that helped more than double its already high market value last year.
Alphabet earned $62.6 billion, or $5.11 per share, in the January-March period, up 81% from the same period last year. Revenue rose 22% from last year to $109.9 billion. Both numbers easily beat analysts’ forecasts, which guided investors.
Alphabet’s stock price rose more than 6% in extended trading after the figures were released, sending shares to a new high during Thursday’s regular session. The company’s market cap has increased from $1.9 trillion a year ago to $4.2 trillion now.
Last quarter’s performance prompted Alphabet CEO Sundar Pichai to celebrate the big bets the company has placed on artificial intelligence technology over the past three years. Pichai said these investments “illuminate every part of the business.”
As always, digital ads powered by Google’s dominant search engine fueled growth, with revenue from these operations rising 16% compared to last year’s first quarter. This was the fourth quarter in a row that Google’s ad sales increased by more than 10% compared to the previous year.
Google’s fastest-growing division remains its Cloud division, which is riding the AI boom to sell more products and services to corporate customers and government agencies, such as its recent deal with the US military. Google Cloud’s revenue increased by 63% compared to last year, reaching $20 billion.
This growth is a sign that Alphabet’s spending spree on artificial intelligence is paying dividends so far; But investors remain concerned that the Mountain View, Calif.-based company and its Big Tech peers are pouring too much money into a nascent and unproven technology.
But Alphabet thinks it’s better to overspend on AI than to be too stingy and risk falling behind.
In its previous quarterly update, published in February, Alphabet said it was setting aside $175 billion to $185 billion for capital expenditures this year, which would largely be devoted to the creation of AI data centers and other technology-related tools. This is on top of last year’s $91 billion in capital spending.
“It’s really exciting to see how our AI investments are delivering value,” Pichai said in a statement Wednesday.
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