According to an official statement issued by Hargreaves Lansdown, Alphabet’s revenue beat expectations in the first quarter, coming in at $69.8bn, after a string of missing consensus estimates.
Additionally, ad revenue was better than expected but still fell year-on-year, at $54.6bn. YouTube ad revenue was in-line with expectations but also fell. When touching on Google Cloud, it was revealed that the service has reached a milestone by becoming profitable for the first time, recording operating profit of $191m
Furthermore, a $70bn (£55.9bn) buyback was announced, while shares initially rose 4.0% in after-hours trading.
When commenting on this, Hargreaves Lansdown lead equity analyst, Sophie Lund-Yates, said: “Alphabet’s cloud business has emerged in profit-positive territory for the first time. This is a feat that has undoubtedly been accelerated by the recent uplift in demand and excitement around artificial intelligence. Despite not necessarily being the front runner in this space, the changing tech landscape is a tide that lifts all ships – all ships that can afford a seat at this table, of which there are very few.
“The market is especially congratulatory about Alphabet’s better-than-expected advertising revenue. This breaks the curse of a difficult run where consensus estimates seemed like an impossible target to reach. As the ultimate bellwether for the advertising industry, Alphabet’s strong showing could have a positive read across for Meta’s imminent results. The stronger showing from YouTube also speaks volumes, as this has long been pegged as a structural growth opportunity for the tech giant, but growing competition from the likes of TikTok has created more of a bearish buzz around the business than usual in recent quarters.
“Plenty of economic challenges still persist, but Alphabet’s first quarter should be seen as nothing short of a triumph.”
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