Google says will buy back US$70 billion in shares, posts earnings beat
[BENGALURU/SAN FRANCISCO] Google parent Alphabet said it would buy back US$70 billion worth of shares as it reported first-quarter profit above Wall Street expectations on Thursday (Apr 24).
Shares jumped 4 per cent in extended trading, adding about US$75 billion to the company's market value.
Alphabet beat quarterly revenue estimates, benefiting from steady growth in its digital advertising business, which helped offset muted growth at its cloud computing unit.
US President Donald Trump's trade policy has triggered worries of an economic downturn, prompting companies to rethink their spending on advertising. But analysts say the digital ad market still held its ground in the first quarter.
'Search saw continued strong growth, boosted by the engagement we are seeing with features such as AI (artificial intelligence) Overviews, which now has 1.5 billion users per month,' CEO Sundar Pichai said.
Revenue from Google's mainstay ad business, which makes up about 75 per cent of its overall revenue, rose 8.5 per cent to US$66.89 billion in the quarter – a slowdown from the prior quarter's 10.6 per cent increase, but still above analysts' expectations for a rise of 7.7 per cent.
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Google Cloud reported a 28 per cent rise in revenue to US$12.26 billion, slowing from the 30.1 per cent growth reported in the previous quarter. Analysts were expecting the unit to report revenue of US$12.27 billion, according to LSEG's data compilation.
The company reported a total revenue of US$90.23 billion for the first quarter, compared to analysts' average estimate of US$89.12 billion.
Alphabet reported a profit of US$2.81 per share for the January to March period, beating estimates of US$2.01 per share, according to LSEG data.
Alphabet spent US$17.20 billion on capital expenditures in the quarter, a 43 per cent increase from the same period a year earlier.
It was part of a planned US$75 billion of spending this year, which Pichai reaffirmed earlier this month, to build out data centre capacity, even as US tariffs threaten to cast a shadow on the capital costs of AI projects.
Pichai said at the time that massive investment was needed to buy the chips and build the servers required to burnish Alphabet's core offerings, including Search, while supporting the development of AI services such as its Gemini model.
Big Tech has continued to defend its aggressive AI spending despite macroeconomic pressures and competitive threat from China's DeepSeek. Amazon's CEO earlier this month wrote in a letter that billion-dollar outlays were necessary to remain competitive in the AI space.
But early signs of tech majors slowing down on data centre leases are already starting to show, with TD Cowen analysts saying last month that Microsoft had abandoned some projects in the US and Europe, while Wells Fargo analysts said this week that Amazon had delayed some commitments around new leases.
With Alphabet's results showing demand for digital ads remains robust, shares of rival ad sellers also rose, with Meta Platforms up 2 per cent, and Amazon and Snap both 1 per cent higher in extended trade. REUTERS
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