4 key takeaways from Google's parent company Alphabet's earnings report

After Google's parent company Alphabet (GOOGL) reported first-quarter results that beat analyst expectations on Thursday, executives spoke on an earnings call to discuss how the company is leveraging artificial intelligence (AI) capabilities across its products. He talked about his plans to expand and his payment decisions. First time paying dividends to shareholders.

AI efforts also boosted Microsoft's (MSFT) earnings on Thursday, and investors will likely be watching to see how the technology impacts Amazon's (AMZN) earnings next week.

Positioning for the “next wave” of AI

Google and Alphabet CEO Sundar Pichai talks about everything from the continued development of Gemini, Google's most capable AI model, to how generative AI could change Google search , AI was the main focus of the conference call, as Google spoke in detail about its AI plans.

Pichai said Google has already been investing in AI for years and the company has “the best infrastructure for the AI ​​era.” He said the company is testing how to add AI to its core search product, including adding AI-generated search summaries for specific questions.

“We are evaluating how to do this by focusing on areas where Gen AI can improve the search experience while prioritizing traffic to websites and merchants,” Pichai said.

In addition to its history of AI investments, Google has six products with more than 2 billion monthly users, and its broad customer base positions it well-positioned for “the next wave of AI innovation,” Pichai said. suggested that it was a possibility. There are billions of his Android devices around the world.

Investing in AI is expensive, but Alphabet says it's worth it

As the company has said in previous quarters, and as other companies like Meta have stated, the models require significant power and expensive equipment to train and run over long periods of time. , investing in AI can be costly.

But Pichai said Alphabet is working on a “perpetual redesign” of its cost base to maintain healthy profit margins while investing in AI, including advertising, Google Cloud and other He said there is a “clear path” to monetize AI through subscriptions.

Pichai cited a number of new products and features announced by the company in recent months, including some at the Cloud Next conference earlier this month, as a wide range of revenue sources that could lead to future revenue growth for the company. did.

Chief Financial Officer Ruth Porat said the company's $12 billion in capital spending in the quarter was driven by investments in Alphabet's technology infrastructure, such as servers and data centers, to strengthen its AI efforts. “It was overwhelmingly promoted,” he said. He said the increase in spending “reflects our confidence in the opportunities that AI presents across our business.”

AI helps advertisers and Alphabet generate ad revenue

Advertising is Alphabet's biggest source of revenue, and Chief Business Officer Philip Schindler said generated AI helps Alphabet “deliver the right ads to the right users at the right time.” He said there was.

Schindler pointed out that generative AI will help advertisers create advertising content more efficiently through Google products such as Gemini, which can generate text and images with simple prompts.

The company also helps retailers “turn intent into action” by running Shopping ads next to search results when a user is searching for a specific product, and by showing whether a product is in stock online. We continue to experiment with new advertising, such as making it possible to “change things”. You can access the store directly from search results in 23 countries.

Alphabet becomes a high dividend stock

Although only briefly mentioned in Alphabet's earnings call, the first-ever dividend in Alphabet's history helped lift the tech giant's stock price in after-hours trading Thursday.

“Given the excellent opportunities ahead, we believe the introduction of a dividend will further strengthen our overall capital return program,” Porat said on a conference call.

Alphabet also announced a new stock repurchase program allocating up to $70 billion for stock buybacks.

Alphabet shares rose 11.8% to $174.42 as of 7:40 p.m. ET after the earnings release, and are up about 25% so far in 2024.

Sources 1/ https://Google.com/ 2/ https://www.investopedia.com/4-key-takeaways-from-google-parent-alphabet-q1-2024-earnings-call-8638757 The mention sources can contact us to remove/changing this article

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