Alphabet, the parent company of Google, had a successful day in the stock market after announcing its first quarterly cash dividend and a $70 billion share buyback. This move resulted in an increase in stock prices by as much as 13% in after-hours trading. Google’s earnings report for the first quarter of the year exceeded Wall Street analysts’ expectations, with revenue reaching over $80.5 billion and profits growing by 57% year-over-year to nearly $23.7 billion. The company attributed its success to investments in artificial intelligence, particularly its Gemini suite of AI products.
Investors have shown a willingness to reward tech companies for their investments in artificial intelligence, seeing it as the future of the sector. Google’s clear paths to AI monetization through ads, cloud services, and subscriptions have been well-received by investors. While some companies struggle to convince investors of responsible AI investments, Google’s positive earnings report has set it apart from the competition. The positive tech earnings reports on Thursday helped reverse the overall sluggish day for tech stocks, with companies like Snap and Microsoft also reporting strong performance.
Social media company Snap reported revenue of $1.19 billion for the first quarter, an increase of 21% from the previous year, with daily active users rising by 10%. The company’s efforts to improve its advertising technology and undergo a restructuring have paid off, with better-than-expected financial results. Snap shares surged by 25% in after-hours trading following the earnings report. Microsoft also reported strong quarterly profits of $21.9 billion, up from $18.3 billion a year ago, demonstrating the success of its focus on AI. Revenue grew by 17% year-over-year to $61.9 billion, with Microsoft’s Azure cloud business experiencing significant growth of 31%.
Investors have taken note of Microsoft’s early investments in AI through products like Copilot for Microsoft365, an AI chat assistant integrated into its business products. Microsoft’s AI initiatives, such as OpenAI’s ChatGPT, have proven successful in driving better business outcomes for the company. While concerns about potential overspending on AI remain, Microsoft’s forward-looking strategy under CEO Satya Nadella is seen as building value across the company’s entire portfolio. Microsoft’s Azure cloud business has been boosted by AI tailwinds, further contributing to the company’s growth and success in the tech sector. As technology continues to advance, companies that prioritize investments in AI are likely to be rewarded by investors for their foresight and innovation.
