Google’s corporate parent Alphabet Inc. on Thursday released a quarterly report showing it’s still reaping double-digit revenue gains from its digital advertising empire while sowing potentially lucrative new ground in artificial intelligence.
The results for the first three months of the year provided the latest evidence that Google has regained its momentum after an unprecedented downturn in 2022 coming out of the pandemic.
In the January-March period, Alphabet’s revenue rose 15% from the same time last year to $80.54 billion, which surpassed the projections of analysts surveyed by FactSet Research. It marked the fourth consecutive quarter of accelerating year-over-year revenue growth for the Mountain View, California, company.
Alphabet earned $23.66 billion, or $1.89 per share, a 57% increase from last year's comparable quarter. The earnings per share also eclipsed the analyst estimates that steer investors.
The company's stock price soared by nearly 13% in Thursday's extended trading after the results came out. That reaction was a stark contrast to how investors responded to a report covering the same quarter from Facebook's parent. Meta Platforms also reported a surge in ad revenue but provided a disappointing outlook for the April-June period, while also warning its profits would be squeezed by increased spending on AI technology.
As has been the case since the company went public 20 years ago, most of the money came in through a digital advertising network anchored by Google’s dominant search engine. Google’s ad revenue totaled $61.66 billion in the first quarter, up 13% from last year.
Despite the ongoing success, Google is facing dual threats that could threaten its future growth.
The U.S. Department of Justice is taking aim at its search engine a lawsuit alleging the company has abused its power by negotiating lucrative deals with Apple and other companies to give it an unfair advantage over potential rivals, stifling innovation as well as competition.
After a two-month trial last fall, the closing arguments in the biggest U.S. antitrust case in a quarter are scheduled to unfold next week and a federal judge is expected to rule whether Google has been breaking the law by the end of this year.
People also may not need to rely as much on Google’s search information to answer their questions and find other information as the artificial intelligence technology that Google, Microsoft and other industry stalwarts are building becomes more sophisticated. If AI gradually supplants the role that Google’s search engine has filled for the past quarter century, Alphabet’s ad sales also could dwindle.
