On Thursday, Google parent Alphabet reported strong revenue growth in its latest quarter for its search engine and video platform, YouTube, as its leading position in the online advertising market continued to reap rewards despite of recent fluctuations in the industry.
Alphabet reported $80.5 billion in quarterly sales, up 15 percent from a year earlier and above analysts' estimate of $78.8 billion. Profits rose 36 percent to $23.7 billion. Analysts expected $18.9 billion.
Alphabet announced that, for the first time, it would give shareholders a dividend of 20 cents per share, to be paid on June 17. The company's board also approved a $70 billion share buyback program. Alphabet shares rose 13 percent in after-hours trading.
The digital advertising industry has had its ups and downs over the past two years. In 2022, inflation and higher interest rates made advertisers more reluctant to spend, dealing a blow to Google and its competitors like Meta, the owner of facebook and instagram. Google's search engine has proven to be the most resilient to the fluctuations that have occurred since then, emphasizing its role as a gateway to the Internet for billions of people.
Alphabet continues to generate tens of billions of dollars in advertising revenue each year and has been using its funds to finance an aggressive push into generative artificial intelligence as part of a widening race with Microsoft and OpenAI, the maker of the ChatGPT chatbot. .
Alphabet said it spent $12 billion on capital expenditures in the first quarter, a 91 percent increase from a year earlier. Ruth Porat, the company's chief financial officer, said in a conference call that Alphabet had increased spending on servers and data centers to implement ai across its business. The company also reported spending $11.9 billion on research and development in the first three months of this year, an increase of 4 percent.
In the last year, Google has incorporated ai into almost every facet of its product portfolio: answering some user questions in the search engine, helping content creators create videos on YouTube, and suggesting ways to start writing. in Google Docs.
But the company's ai ambitions faced a notable setback in the first quarter. In February, users noticed that Google's Gemini chatbot was creating images of people that weren't always historically accurate, depicting America's Founding Fathers and World War II German soldiers as multiracial, and women like stale potatoes. He also refused to produce images of white people. Internet users expressed their outrage on social networks.
Google executives promised to fix the problem and in the meantime paused the chatbot's ability to generate images of people.
In Thursday's earnings report, the company gave few indications of whether the chatbot, which has free and paid versions, had taken off as a business. Sundar Pichai, Google's chief executive, said in a statement that the company was “well on its way in our Gemini era.”
To continue paying for Gemini and other artificial intelligence products, Alphabet has tried to cut costs, including laying off workers. Since the beginning of the year, it has laid off employees in many of its business units, including YouTube, ai-shift-cfo-tells-employees-in-memo.html” title=”” rel=”noopener noreferrer” target=”_blank”>finance and its central engineering division.
As of March 31, Alphabet had 180,895 employees, slightly fewer than the 182,502 it had three months earlier, but a drop of nearly 10,000 from a year earlier. At the end of 2019, the company's workforce stood at 119,000, before embarking on a hiring spree during the pandemic, when it saw a surge in use of its online services.
In the first quarter, Google's search and related revenue rose 14 percent to $46.2 billion, above analysts' estimate of $45 billion.
Advertising sales on YouTube, Google's video platform, rose 21 percent to $8 billion, above the $7.7 billion expected by analysts.
Google Cloud, the company's unit that rents computer software and services to other companies, reported sales rose 28 percent to $9.6 billion. Analysts had estimated $9.4 billion.
