Google Parent To Buy Back Stock Worth $70 Billion

Google Parent To Buy Back Stock Worth $70 Billion

Cloud services demand contributed to better-than-expected results, and ad sales performed well. Traders were elated by this news, sending shares of Google’s parent company up about 4 per cent after hours.

With earnings per share of $1.17, excluding items, Alphabet exceeded average expectations of $1.07. Even though Google exceeded revenue and earnings per share expectations, Insider Intelligence Senior Analyst Max Willens noted that investor optimism remained modest despite the company’s success.

Although Alphabet’s cloud computing division generated a profit, it is still weakening its growth. However, sales for the unit rose 28 per cent to $7.41 billion. Consumers are returning to shopping in stores as a result of advertisers’ cuts on spending. A younger audience is also being targeted with new platforms such as TikTok.

It is only the third time in the company’s history that ad sales have gone down since going public in 2004. Alphabet reported a slight decline from $54.66 billion to $54.55 billion. The company has been cutting costs by reducing employee perks and resource use during economic downturns to maintain tight cost control.

A decision was made in January to cut 12,000 jobs at the company. According to a March email from CFO Ruth Porat, employees can expect additional cost-saving measures in the coming months. In contrast, Google competes with rivals like Microsoft, which recently invested $10 billion in OpenAI to develop AI that can respond to queries and prompts.

Even as Microsoft exceeded Wall Street’s Q3 revenues and profits, Google is working to stay competitive in AI. Despite declining net earnings from $16.44 billion to $15.05 billion, Alphabet’s Q1 revenue of $69.79 billion exceeded Refinitiv’s forecast of $68.95 billion. Amazon’s stock and Meta platforms were also up by 2 per cent.

Google Alphabet Shares Stock

In the first quarter, nearly $32.8 billion of Alphabet’s revenue came from the US market. Alphabet’s operating income decreased by 13.3% in the first quarter to $17.4 billion. Google’s earnings per share dropped by 4.8 per cent during the year.

More than 89 per cent of Google’s total sales came from advertising, Android, Chrome, hardware, Maps, Search, Google Play and YouTube. Revenue increased by almost $68 billion, or nearly 0.81%, from the first quarter of 2022.

Google’s first-quarter advertising revenue declined slightly to $54.5 billion from Search, YouTube, and other businesses. In the March quarter, cloud businesses generated about $7.4 billion in revenue, up 28 per cent year over year. In addition to its infrastructure and analytics platforms, Google Cloud offers enterprise collaboration tools and other services.

Cloud platform services and workspace collaboration tools are its primary sources of revenue. During the quarter, Alphabet earned $191 million in operating income from its cloud business. Compared to last year’s first quarter, when the division lost $706 million, this quarter’s loss was $455 million.

According to corporate filings, the company’s operating loss from other bets, or subsidiaries, grew to about $1.2 billion from $835 million in 2022. Additionally, the company earns revenue from licensing, research and development services, and selling internet offerings.

Alphabet’s X lab, Waymo and other non-Google companies fall in this category. Alphabet spent about 16.4% of its sales on research and development for its first quarter of operations. For the same period in 2022, R&D expenditures were about 26 per cent higher than in 2017.

Affiliates and online companies receive TACs when they bring traffic to their websites. Several companies, including Google and Yahoo, incur a significant expense in this area. By the end of March, Alphabet had a total cash balance of close to $115.1 billion, up from $113.7 billion the previous year.