Alphabet, the parent company of Google, announced its first-ever dividend of 20 cents per share and a massive $70 billion stock buyback. This move encouraged investors, causing the stock to surge nearly 16 percent after the bell, and boosting the company’s market value to over $2 trillion.
Returning capital amid strategic investments
While Alphabet is returning capital to shareholders, it is simultaneously investing billions of dollars in data centers to bolster its capabilities in generative artificial intelligence (AI). This strategic move positions Alphabet to remain competitive with its rivals in the rapidly evolving tech landscape.
This move comes following Alphabet’s big tech rival, Meta Platforms, announced its first-ever dividend. Meta’s move raised its stock market value by $196 billion the day following the announcement.
Strong financial performance
Alphabet’s quarterly results surpassed expectations across key metrics, including sales, profit and advertising revenue. The company’s revenue for Q1 reached $80.54 billion, exceeding estimates of $78.59 billion. The robust performance was driven by increasing demand for its cloud services and steady advertising spending, fueled in part by the growing adoption of AI.
Google revealed that its advertising sales increased 13 percent to $61.7 billion in Q1, exceeding market forecasts of $60.2 billion.
Read: Samsung and Google to team up for next level AI
Attractive offerings
Despite the company’s growing popularity, Alphabet faces challenges such as rising capital expenditures and increased competition in the tech industry. Despite recent criticism of its AI chatbot, Gemini, Alphabet remains focused on addressing issues and advancing its AI capabilities.
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