Alphabet Shares Surge as AI Powers Strong Q1 Earnings Amid Trade Worries

Alphabet Inc. (NASDAQ: GOOGL) delivered better-than-expected Q1 results, driven by strong performance in its core ad business and sustained momentum in AI investments. The tech giant reported revenue of $90.23 billion, beating estimates of $89.12 billion, and posted earnings per share of $2.81, far exceeding the $2.01 consensus. Alphabet also announced a $70 billion stock buyback plan and a 5% dividend increase, boosting shares by 4% after hours and adding $75 billion to its market value.

Google’s ad revenue rose 8.5% to $66.89 billion, topping expectations, though slower than last quarter’s 10.6% growth. AI integration in Google Search continues to play a critical role, with CEO Sundar Pichai noting that AI Overviews now reach 1.5 billion monthly users. Despite global economic uncertainty and rising costs from U.S.-China trade tensions, Alphabet reaffirmed its $75 billion capex plan for 2024, signaling no slowdown in AI infrastructure expansion.

However, the company acknowledged potential challenges. Chief Business Officer Philipp Schindler said Trump’s move to revoke the de minimis exemption for low-value Chinese imports may create headwinds, particularly from APAC retailers like Temu and Shein cutting U.S. ad spending. Analysts remain cautious, citing broader concerns over tech companies scaling back data center commitments amid rising expenses.

Google Cloud revenue climbed 28% to $12.26 billion, slightly below estimates, reflecting a modest slowdown from the prior quarter. Still, Alphabet’s aggressive AI strategy appears intact, countering fears of an AI investment bubble. Analysts see this as a bullish signal for peers like Meta (NASDAQ: META) and Amazon (NASDAQ: AMZN), whose shares also rose in after-hours trading.

Alphabet’s capital expenditures surged 43% to $17.2 billion year-over-year, underscoring its long-term bet on AI to fuel growth despite market volatility.