Alphabet, Google’s parent company, sought to reassure anxious technology investors on Thursday by announcing that its investments in artificial intelligence (AI) are significantly bolstering returns in its vital advertising sector. The company minimized concerns about the potential effects of global economic instability for the time being.
In its first-quarter earnings report, Alphabet exceeded profit and revenue forecasts, stating it would initiate a stock buyback worth $70 billion (approximately Rs. 5,97,800 crore). This announcement led to a four percent increase in its shares after hours, enhancing its market valuation by $75 billion (around Rs. 6,40,362 crore).
During the earnings call, Alphabet reaffirmed its ambitious plans for AI development and maintained its capital expenditure forecast of $75 billion (approximately Rs. 6,40,362 crore) for the year, offering a glimmer of hope to investors in rival firms such as Meta and Amazon, whose shares also surged in aftermarket trading.
Concerns over a potential economic downturn have been exacerbated by U.S. President Donald Trump’s trade policies, prompting companies to reconsider their advertising budgets. Additionally, there is growing apprehension among investors that major tech corporations may need to reconsider or delay their substantial AI infrastructure investments due to rising costs attributed to tariffs imposed between the U.S. and China.
Despite mounting pressures, leading technology firms continue to affirm their commitment to aggressive AI spending as crucial for maintaining competitiveness. However, analysts have observed initial signs that these companies might be holding back on commitments to new data centers.
Will Rhind, CEO of GraniteShares, commented, “The prevailing narrative around infrastructure expenditure has been largely negative, suggesting that AI investments have reached their peak and that this could indicate a deflating bubble. What Google communicated today contradicts that narrative.”
Alphabet’s core advertising revenue, which constitutes nearly three-quarters of its total revenue, climbed by 8.5 percent to $66.89 billion (approximately Rs. 5,71,134 crore) in the quarter. Although this marks a slowdown from the previous quarter’s 10.6 percent growth, it still surpassed analysts’ expectations of a 7.7 percent increase.
Nonetheless, Philipp Schindler, Alphabet’s chief business officer, acknowledged that the company is not insulated from broader economic uncertainties. He noted, “Adjustments to the de minimis exemption will present a slight challenge to our advertising business in 2025, especially impacting retailers based in the Asia Pacific region,” referring to a recent order from Trump that halts a trade regulation allowing low-value packages from China and Hong Kong to enter the U.S. duty-free.
Prominent U.S. advertisers, including Chinese e-commerce platforms like Temu and Shein, are reportedly reducing their digital advertising expenditures in the U.S., a move that could adversely affect ad revenues for Google and Meta.
Growth in Search Revenue
The integration of AI into Google’s search functionality plays a crucial role in enhancing its appeal to advertisers, enabling them to conduct more effective campaigns and achieve better returns on investment.
CEO Sundar Pichai stated that AI Overviews, which are summaries presented above traditional hyperlinks to related web pages, now attract 1.5 billion users on a monthly basis. Google introduced an AI-only mode to its search feature in March.
David Heger, an analyst at Edward Jones, remarked, “Search revenue growth remains robust despite concerns that generative AI platforms like ChatGPT might affect the search industry.”
Google Cloud also experienced a revenue increase of 28 percent, reaching $12.26 billion (approximately Rs. 1,04,680 crore), although this growth rate slowed compared to the prior quarter’s 30.1 percent rise. Analysts had anticipated revenue of $12.27 billion (around Rs. 1,04,745 crore) for the cloud division, according to data compiled by LSEG.
Overall, Alphabet reported total revenue of $90.23 billion (approximately Rs. 7,70,265 crore) for the first quarter, surpassing analysts’ average predictions of $89.12 billion (approximately Rs. 7,60,782 crore).
Alphabet’s net income stood at $2.81 (approximately Rs. 2.81) per share for the January-March period, exceeding estimates of $2.01 (around Rs. 171.59) per share, based on LSEG data. The firm also announced a five percent increase in its quarterly dividend to 21 cents per share.
The company reported capital expenditures of $17.20 billion (approximately Rs. 1,46,824 crore) for the quarter, representing a 43 percent rise from the same time last year.
© Thomson Reuters 2025
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
