Google parent company Alphabet made headlines on Thursday with a blockbuster earnings report that caused its stock price to surge over 12% in limited afternoon trading. This increase is expected to boost the company’s market capitalization by more than $200 billion to about $2.2 trillion when normal trading resumes on Friday, potentially leading to Alphabet achieving its first-ever $2 trillion valuation. The impressive first-quarter earnings report surpassed analyst expectations, with revenue reaching $80.5 billion and earnings per share at $1.89, well above estimates of $78.8 billion and $1.51, respectively.
The significant surge in Alphabet’s shares was fueled by a 62% year-over-year growth, resulting in the company’s best-ever quarterly profit of nearly $24 billion. This positive performance has put Alphabet on track to join the elite group of companies valued at over $2 trillion, alongside Microsoft, Apple, and Nvidia. In addition to its financial success, Alphabet also announced its first-ever cash dividend, indicating a modest 0.5% dividend yield. This move reflects Google’s maturity as a company, as dividends directly reward shareholders of a company’s profits.
Despite trimming its headcount from 191,000 to 181,000 during the last quarter, Alphabet managed to achieve record profits and sales, making it the best quarter in the company’s history. While Google’s revenue may have moderated in the opening stretch of 2024 compared to the previous quarter, it is worth noting that the fourth quarter has historically been Google’s highest-grossing quarter since going public. Alphabet, a conglomerate with advertising at its core, generates over 75% of its revenue from ads, making it one of the leading players in the online advertising space.
Alphabet’s success comes at a time when the company is facing challenges related to its Gemini generative artificial intelligence program. Despite shedding a significant amount of market value after admitting to shortcomings with Gemini, Google has managed to maintain its dominance in the online search market. While Gemini has yet to impact Alphabet’s income statement significantly, CEO Sundar Pichai has declared 2024 as the early days of “the Gemini era.” With shares of Alphabet reaching a new all-time high and flirting with a $2 trillion valuation, the company’s continued growth and innovation, coupled with its strong financial performance, position it as a key player in the tech industry.
